Brussels 'ready' to cut off access for City of London post-Brexit

The EU’s financial services chief Valdis Dombrovskis told the Financial Times that Brussels is ready to cut off the City of London’s market access following Brexit.

The move was seen by some as a sign of the pressures that the UK could come under in order to stay closely aligned with EU rules after Brexit.

Dombrovskis said Brussels was willing to grant the UK access through a system of “equivalence” such as that already in use by banks and brokers in other countries, including Singapore and the US.

Nonetheless, he added that the European Commission would be especially vigilant when it came to checking that British rules for ensuring financial stability and protecting consumers remained aligned to the EU’s own standards.

Access would be cut off in the event that the UK “engage[d] in some kind of deregulation”.

“The more systemically important the market is for the EU, the more we import potential risks, [and] the closer the regulatory alignment that is expected,” he said.

Prime Minister Boris Johnson had said that the UK could try to secure extensive EU market access for UK industries and at the same time diverge from the union’s rules.

EU chief Brexit negotiator Michel Barnier warned that this could lead to “dumping” that damaged European industries, something that the EU would not stand for.

Dombrovskis concluded: “It shouldn’t be overly difficult for Britain to qualify for equivalence, seeing as currently the UK is applying EU financial sector legislation.”