Davis to the City: Fate of Banks Is U.K.'s Top Brexit Priority

  • ‘We’re determined to maintain the City’s competitiveness’
  • Davis: London’s finance district makes ‘crucial contribution’

David Davis, U.K. exiting the European Union (EU) secretary, arrives at Downing Street in London.

Photographer: Luke MacGregor/Bloomberg

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The U.K. is determined to protect London’s financial district by striking a Brexit deal that works for global banks, David Davis said, amid signs firms are stepping up plans to move operations to other countries.

“When I sit round the negotiating table with Michel Barnier, or round the cabinet table with my colleagues, it’s always with the importance of the City very much in my mind,” the Brexit secretary said in London on Thursday. “We’re determined to maintain the City’s competitiveness.”

The comments are the warmest from Britain’s chief negotiator about the importance of the capital maintaining its status as a world finance center at the heart of European markets.

He was speaking at an awards ceremony organized by London newspaper City A.M. hours before departing for Brussels to wrap up the latest, two-day round of Brexit negotiations, in a meeting with the EU’s chief negotiator Friday. 

There has been no breakthrough in the talks after the first day, an EU official said on Thursday, with limited hope of major progress in the remaining sessions on Friday.

Michel Barnier

Photographer: Dario Pignatelli/Bloomberg

As the time available to strike a new U.K.-EU trade deal runs down toward Brexit day in March 2019, Theresa May’s government is pressing the Europeans to outline a transition period by early 2018.

Transition

The two-year transition plan is designed to stop businesses based in Britain from relocating staff to other EU cities in order to continue trading across the 27 remaining countries in the bloc after Brexit. However, negotiations in Brussels remain stuck on the terms of the divorce.

The EU won’t allow discussions to move on to trade or transition planning until Britain agrees to pay the so-called exit bill -- currently set at 60 billion euros ($70 billion) -- and to protect the rights of Europeans living in the U.K. The future of the Irish border after Brexit remains a key priority to resolve, amid reports it could become a major stumbling block.

Read more: ECB board member warns banks must make Brexit decisions now

Companies including UBS Group AG have recently set out their plans to move London-based workers elsewhere within the EU as a result of the Brexit vote in last year’s referendum. 

On Thursday, lawmakers in London warned that the U.K. is facing a “flood” of financial firms flowing out of the country if Davis fails to reach a binding deal on a long transition phase by the end of next month.

In his comments, Davis tried to reassure his business audience that he understood their fears: “Just last week, Britain was ranked as the seventh-best place in the world to do business — ahead of both France and Germany.”

“A lot of that success stems from the hard work of all of you in this room tonight -- representing the City of London, which of course makes a crucial contribution. There are more head offices of banks in London than in any other place in the world,” David said.

Davis said he was “optimistic” he would be able to get “a deal that delivers as tariff-free and barrier-free access to the single market,” while giving other EU countries “the same access to the U.K. market.”

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