Macron rebuffed post-Brexit City deal unless UK paid into EU budget

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Brexit negotiations with the EU have started up again, with talks on financial services. After months of wrangling, new rules for trade were finally agreed on Christmas Eve, just days before the year-end deadline. But in a document spanning over 1,200 pages, there was very little mention of financial services: a sector which accounts for seven percent of the UK’s economy and 10 percent of its tax receipts.

The two sides hope there will be a “memorandum of understanding” in place by the end of March.

The agreement will seek to ensure the two sides continue to have similar regulations going forwards that mean similar standards are upheld both in Britain and on the continent.

According to Lee Rotherham, the former director of Special Projects at Vote Leave, there is a simple explanation why the deal did not include an arrangement for financial services.

He wrote in a report seen by “Overall, the Services section seems like an average FTA, enabling activity up to a point.

“It is worth remembering that of the so-called ‘Four Freedoms’, [Services] is the area that was least pursued by the EU.”

He noted: “The UK wanted it; the Germans and French wanted to focus on goods, which was to their economic advantage.”

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It is no secret that the bloc’s main hubs, such as Frankfurt and Paris, have been trying to use Brexit to spell the end of London’s status as one of the world’s leading financial hubs.

Already in 2018, French President Emmanuel Macron rejected the idea of a tailored Brexit deal for the City, insisting Britain would have not been allowed full access to European Union markets, including financial services, unless it paid into the EU budget, accepting all its rules.

Mr Macron delivered the tough message at the end of a joint press conference with former Prime Minister Theresa May at Sandhurst military training college.

Asked whether France would have sought to “punish” Britain, by insisting financial services should not be included in a UK-EU trade deal after Brexit, Mr Macron said: “I’m not here to punish or reward.

“The choice is up to Britain: it’s not my choice – but they can have no differentiated access to financial services.

“If you want access for financial services, be my guest – but it means you have to contribute to the budget, and accept European jurisdiction.

“It’s a situation that exists for Norway”.

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Mr Macron’s comments came a year after former Foreign Office Minister Jeremy Browne, who was acting as the City of London’s envoy on Brexit, said that France was actively seeking to exploit Brexit to disrupt and degrade Britain’s lucrative financial sector.

In a leaked memorandum, he said his time in Paris had been “the worst”, with the French open about their desire to see the UK weakened.

Mr Browne, who met banking chiefs, senior politicians and diplomats, wrote: “They are crystal clear about their underlying objective: the weakening of Britain, the ongoing degradation of the City of London.

“The meeting with the French Central Bank was the worst I have had anywhere in the EU. They are in favour of the hardest Brexit. They want disruption.

“They actively seek disaggregation of financial services provision.

“Every country, not unreasonably, is alive to the opportunities that Brexit provides, but the French go further, making a virtue of rejecting a partnership model with Britain and seemingly happy to see outcomes detrimental to the City of London even if Paris is not the beneficiary.”

Mr Browne – a Liberal Democrat minister in the coalition under David Cameron and Nick Clegg – said hostility to the UK was not confined to a few officials but represented a “whole-of -France collective endeavour”.

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He added: “The clear messages emanating from Paris are not just the musings of a rogue senior official in the French government or central bank. France could not be clearer about their intentions. They see Britain and the City of London as adversaries, not partners.”

The memo was originally published in the Mail on Sunday.

Mr Browne’s comments are supported by the fact that France has been reportedly trying to dethrone London as the continent’s banker for almost a decade now.

In 2012, the former Governor of the Bank of France, Christian Noyer, said London should have been stripped of its status as Europe’s main financial hub and sidelined to allow the eurozone to “control” transactions within the bloc.

Mr Noyer told the Financial Times that there was “no rationale” for allowing the eurozone’s financial centre to be “offshore”.

He said: “Most of the euro business should be done inside the euro area. It’s linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency.

“We’re not against some business being done in London, but the bulk of the business should be under our control. That’s the consequence of the choice by the UK to remain outside the euro area.”

Mr Noyer’s broadside was one of several outspoken public attacks that had been launched by French leaders on Britain.

After Standard and Poor’s stripped France of its AAA credit rating, Mr Noyer said Britain’s rating should have been cut before that of France as the UK had “as much debt, more inflation, less growth than us”.

Jean–Pierre Jouyet, the former head of the French financial regulator, described the right–wing of British politics as “the world’s stupidest”.

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