Merkel ally wants City stripped of euro trade
A top European Parliament ally of German Chancellor Angela Merkel has said London's financial markets business tied to the euro must be pared back after Brexit - highlighting one of the possible red lines in the upcoming negotiations.
"When Great Britain is leaving the European Union, for us it's not thinkable that, at the end, the whole euro business is still managed in London," Manfred Weber, leader of the Christian Democrats in the 28-nation assembly, told reporters yesterday in Strasbourg. "The euro business should be managed on EU soil."
That was a reference to so-called euro clearing - a type of wholesale banking dominated by London.
The EU Parliament is to set out its priorities for Brexit talks due to start next month. The parliament won't take part in the negotiations but does have a veto over any agreement.
Among the potential prizes for capitals across the EU are financial markets jobs now based in London.
These include those at the European Banking Authority, an agency that will move from London as a result of Brexit.
As banks prepare to relocate employees from the UK in anticipation of the country's exit from the EU, the fate of British-based work tied to the clearing of euro-denominated derivatives trades remains unclear.
French and German officials have called for clawing back clearing in euro-denominated derivatives from the UK, where trillions of euro of swaps trade. The European Central Bank previously tried and failed to take euro-clearing away from Britain.
Even if politicians want it to happen, it is not clear how private businesses could be forced to transact all of their euro trades inside the eurozone. (Bloomberg)