Wednesday 21 March 2018

Private equity giants in Luxembourg Brexit plan

Jeroen Dijsselbloem
Jeroen Dijsselbloem

Nikos Chrysoloras

US private equity firms Blackstone and Carlyle are pushing ahead with plans to establish so-called passporting rights in Luxembourg to retain the ability to do business in the European Union after the UK's exit, according to people familiar with the matter.

The move is seen as administrative, less about moving people and offices from London and more to preserve access to European investors after Brexit, the sources, who did not want to be identified, said. Representatives for Blackstone and Carlyle, which already has some operations in Luxembourg, declined to comment.

It comes as European Union finance ministers threw down the gauntlet to the UK, warning that London banks will lose access to the bloc if Britain veers from financial regulations written in Brussels.

In a speech on Tuesday, Jeroen Dijsselbloem, head of the group of euro-area finance ministers, cautioned Britain against any plan to use lighter-touch regulations or lower taxes to attract business following withdrawal from the EU.

He called on Britain to accept the "hard truth" that the UK must continue to align with Brussels for its businesses to operate on the continent.

"We have heard threats of going rogue and creating an offshore tax haven," Dijsselbloem, the Dutch finance minister, said in Brussels.

"That would be a huge mistake, and it would certainly stand in the way of a fair trade deal that would suit us both."

British Prime Minister Theresa May had suggested that the UK is prepared to use all tools at its disposal to attract business to the country if the EU declines to offer a post-separation arrangement that is acceptable to her government. (Bloomberg)

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