Harry Wilson: ‘EU power grab could backfire’

Harry Wilson has written a piece for The Times on Brexit:

If Donald Trump wants a trade war then he could hardly ask for a better ignition switch than Brexit. At present things are shaping up to get rough between the UK and the European Union over the future terms of trade for financial services.

In a meeting with financiers last week, the prime minister was told that preventing disruption to the sector should be one of her top priorities, and that Britain must impress upon Brussels the need to preserve London as a financial hub.

The subtext to this is that the UK must demonstrate that largely French attempts to use Britain’s withdrawal as a chance to grab a slice of finance business risks handing a short-term gain to Paris at the expense of providing the Trump administration with a copper-bottomed excuse to launch a full-scale trade war with the EU.

At present the vast majority of euro-denominated assets are cleared through firms based in London. The eurozone governments have been unhappy with this since the financial crisis when they were largely impotent in the face of shorting attacks on their markets and in Brexit they have the ideal opportunity to correct what they see as an unfair position.

The problem is that a move to strip euro clearing from London could have unfortunate side effects. Though the UK is the largest clearing centre for euros, New York also has a stake in the game and it is hard to see how a rule could be constructed lawfully that removes the business from London but also allows it to continue elsewhere outside the single bloc.

Read more of Wilson’s article here.