Goldman Adviser With EU Ties Has a Warning for the City of London

The European Union is unlikely to grant equivalence to the U.K. on financial services, with divergence between the two “the most likely scenario” in coming years, Goldman Sachs Group Inc. adviser Jose Manuel Barroso said.

“I personally believe that there will be no permanent equivalence decision on the side of European Union, regarding financial services,” Barroso told a Moody’s Investor Services webinar Thursday. “It’s more or less inevitable, irreversible, a trend of progressive divergence,” he said.

The comments from Barroso, who led the European Commission for a decade until 2014, underscore the tough line the EU has taken on the issue so far. Europe and the U.K. have yet to negotiate a deal for finance that would permit anything like the pre-Brexit status quo. Talks slated to end in March center around a path forward for cooperation, and have mainly symbolic relevance, while any decision on equivalence is unlikely to come anytime soon.

“It is clear” the EU wants more business to shift from London to the euro area as a result of Brexit, Barroso added. The bloc wants the “dislocation” of some capital, people and “management of risk from the U.K. to the euro area, and to the European Union in general,” he said.

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