I commented a short while ago on the way that Andrew Bailey, the governor of the Bank of England, is handling the City’s new relationship with the EU.
Since financial services are not really covered by the FTA agreement signed last year there is due to be a memorandum of understanding on them drawn up by March. But Mr. Bailey seems very unhappy with the current relationship accusing the EU or trying to poach business from the City of London, including euro denominated derivatives, a huge business.
The EU is doing this for two reasons.
First it can, before hand the ECJ stopped it, but then the UK left the EU and the ECJ writ no longer runs. So trying to get its hands on more business now the court can’t stop it is the natural consequence of Brexit.
Secondly it is very wary of UK plans to deregulate, only this week the insurance industry asked for a lowering of reserve requirements that Brussels had insisted on.
If it succeeds this would make UK insurance companies more efficient, if slightly riskier, but also it will be a sign to the EU that the UK will weaken regulations. The danger is that means it will not give the UK’s financial services industry the “equivalence” that it wants. That is, concede that UK regulation is as good as EU regulation even if it is different. Since a decision on that is due by March, we will soon know which way the wind is blowing.
The City can proudly boast it is cheaper, more efficient and less regulated than other financial centres in the EU and attract business that way. But it may well lose equivalence and therefore more business will go to the EU. It is a difficult balancing act, but complaining that the EU is poaching business is silly, this is just competition with an economic rival.
https://jonty.substack.com/
More to the point Andrew Bailey why aren't you on the front foot going after their markets? If you aren't up to the job I'll do it I could not do any worse!
Keeping business in the City? I think it may be more keeping up appearances with the fine bone China and Royal periwinkle crockery at the BoE. With the riparean supper on the banks of the Thames at Henly regatta.
It is clear that the reason the EU didn't want the FTA to include the City was their determination to steal its business now that they could. It would teach the UK a lesson it would never forget which would appease the ranting French President.
Deregulation bring the potential for profit by owning greater risk. If you buy and sell science & technology stocks you are owning the risk that an Invention might be a flop. With fewer perhaps more targeted regulations it would hopefully reduce the bureaucracy and free up the business to make even more profit.
I'm reminded of the regulatory ways of an early Ireland. Dublin was known as the Pale and outside Dublin was beyond the Pale where there was less law. In this example the EU is the Pale and the UK in arguably beyond that pale.
Andrew Bailey reminds me of the little Billy bunter figure standing crying in the playground at lunchtime and the dinner lady goes over and asks why what has happened? He took my ball! Well would you like me to go and get it back or are you big enough and brave enough to go get it yourself?