The muscle and mettle of the City of London will be tested as the powerful financial services industry looks to strike a side deal with the European Union.
As a cohesive political approach to the Brexit divorce continues to splinter on the back of the general election results, the financial services sector is looking to shore up its position with the most favourable outcome.
According to the Financial Times , the group will be led by former City minister Mark Hoban and comes after a string of key institutions have announced concrete plans to create operations outside of the capital, damaging London as the world’s premier money market.
Already a number of big names from the City and Canary Wharf are stepping up operations in Frankfurt, Dublin and Luxembourg to ensure uninterrupted and seamless access to the EU – so-called “passporting rights”.
The intervention by the City feeds into the sense of confusion in the early days of negotiation into how and when the UK will leave the 28-member bloc.
Reports in The Guardian quote Whitehall insiders who say they are quietly shelving the so-called “cake and eat it” option – full access without EU dominance founded on the UK’s economic global strength.
Instead, the more realistic proposals on the table are the “Norway option” – members of the European Economic Area (EEA) and European Free Trade Area (EFTA) – or a free trade agreement similar to the EU-Canada deal.
Prime Minister Theresa May set out her ambition in her Lancaster House speech in January which was characterised as a cliff-edge hard Brexit deal with sovereignty and control of the borders at its heart.
But since then she has lost most of her political capital, allowing those favouring an economically-literate Brexit to make the running. These include Chancellor of the Exchequer Philip Hammond, who has become increasingly confident in his calls for jobs to be the priority, regardless of the dilution of the Brexit ideal.
The EEA-EFTA model would mean staying in the single market and therefore submitting to the free movement of people and submitting to European Court of Justice rulings. While this would appease the business community and 48% of those who voted Remain, it would be unpalatable to the majority of those who wanted to leave precisely because of concerns over immigration and sovereignty.
Talks with business
Secretary of State for Exiting the EU David Davis has denied there has been any change of stance or mood and reaffirmed Mrs May’s Lancaster House speech as the official strategy and the basis of current negotiations.
But he will host a conference at his official residence of Chevening House in Kent on Friday for business leaders, following reports that bosses felt excluded from the Brexit decision-making process. The move will answer criticisms that the business community has little access and influence over the directions of talks.
Mr Davis said he would spell out a clear mechanism to allow regular dialogue, another sign that the ideologues have conceded some ground to the “soft Brexiteers”.
Keep up to date with all our articles on Facebook