Article published on 7 July 2020 www.igniteseurope.com
Luxembourg‚Äôs finance minister has warned that the UK‚Äôs plans to diverge from EU regulations for the financial services industry are threatening the country‚Äôs future access to the EU market post-Brexit, the Financial Times reports.
Pierre Gramegna, who has spoken out in favour of preserving the EU‚Äôs close links with the UK‚Äôs financial services industry, tells the publication that the UK government‚Äôs expectations of enhanced equivalence are ‚Äúin contradiction‚ÄĚ with its demand for sovereignty in terms of financial services rules.
Mr Gramegna says in the Financial Times interview that Luxembourg wants to ‚Äúmake sure that we still have a footbridge left‚ÄĚ even if the links between the UK and the EU become looser, saying it ‚Äúwould be in the interest of both sides‚ÄĚ.
He warns, however, that this ‚Äúcan only be achieved if both sides have the will to do so‚ÄĚ.
Mr Gramegna believes the UK‚Äôs objectives are hard to reconcile, according to the Financial Times.
‚ÄúThe UK at the same time says ‚Äėas soon as we will be out we will be 100 per cent sovereign again and be able to choose what we do with our own regulation‚Äô,‚ÄĚ he tells the publication.
‚ÄúThat sounds to me in contradiction with the idea of having an enhanced equivalence. You cannot defend the two things in parallel.‚ÄĚ
The EU and the UK last month missed a deadline to conclude equivalence assessments, with both sides blaming each other for failing to complete the assessments.
Michel Barnier, the European Commission‚Äôs chief Brexit negotiator, said in a speech last week that the UK had only completed four out of 28 questionnaires relating to areas of financial regulation where equivalence can be granted.
Mr Barnier noted the UK is demanding regulatory divergence from the EU while ‚Äútrying to keep as many single market benefits as it can‚ÄĚ to ‚Äúmake it easy to continue to run EU businesses from London, with minimal operations and staff on the continent‚ÄĚ.
The Financial Times says Mr Gramegna‚Äôs warning shows that even sympathetic governments have lowered their expectations for their future relationships with the UK because of the UK government‚Äôs negotiating position.
The Grand Duchy has been at the forefront of EU governments demanding that the bloc adopt a pragmatic attitude towards market access for financial services.
Luxembourg is Europe‚Äôs largest investment fund domicile, with locally-registered funds being sold in over 70 countries globally and managing nearly ‚ā¨4.5 trillion in assets.