Article published on 7 July 2020 www.igniteseurope.com
Luxembourg’s finance minister has warned that the UK’s plans to diverge from EU regulations for the financial services industry are threatening the country’s future access to the EU market post-Brexit, the Financial Times reports.
Pierre Gramegna, who has spoken out in favour of preserving the EU’s close links with the UK’s financial services industry, tells the publication that the UK government’s expectations of enhanced equivalence are “in contradiction” with its demand for sovereignty in terms of financial services rules.
Mr Gramegna says in the Financial Times interview that Luxembourg wants to “make sure that we still have a footbridge left” even if the links between the UK and the EU become looser, saying it “would be in the interest of both sides”.
He warns, however, that this “can only be achieved if both sides have the will to do so”.
Mr Gramegna believes the UK’s objectives are hard to reconcile, according to the Financial Times.
“The UK at the same time says ‘as 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’,” he tells the publication.
“That sounds to me in contradiction with the idea of having an enhanced equivalence. You cannot defend the two things in parallel.”
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’s 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 “trying to keep as many single market benefits as it can” to “make it easy to continue to run EU businesses from London, with minimal operations and staff on the continent”.
The Financial Times says Mr Gramegna’s warning shows that even sympathetic governments have lowered their expectations for their future relationships with the UK because of the UK government’s 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’s largest investment fund domicile, with locally-registered funds being sold in over 70 countries globally and managing nearly €4.5 trillion in assets.
