Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Germany says EU pragmatism needed on London finance links

Published 30/10/2020, 09:17
Updated 30/10/2020, 11:05
© Reuters. FILE PHOTO:  The City of London financial district is seen during early morning mist from Greenwich Park in London

© Reuters. FILE PHOTO: The City of London financial district is seen during early morning mist from Greenwich Park in London

By Huw Jones

LONDON (Reuters) - A senior German government official said on Friday he was "deeply concerned" about the lack of progress in trade talks between the European Union and Britain, given the heavy reliance of German companies on funding from London's financial hub.

London is Europe's biggest financial centre, but faces being largely cut off from the bloc when Britain's post-Brexit transition arrangements expire on Dec. 31.

Britain and the EU have entered an intensive phase in talks on a free trade deal, though EU access for financial firms in Britain is being dealt with separately by Brussels.

"German corporates, for all that I can tell, rely massively on wholesale financing offered from the City of London, so in that sense we will have to maintain pragmatism, no matter what happens," Deputy Finance Minister Joerg Kukies told an online event held by Afore Consulting.

"But at the moment we are deeply concerned by the lack of progress in the negotiations," he said.

Kukies said no matter what comes up "there is so much depth and intensity of relationships between European countries and the UK that this will not degenerate into animosity, I am absolutely convinced about that."

The EU is accelerating work on a capital markets union (CMU) to cut reliance on London and help fund recovery from COVID-19, a five-year old project that has made patchy progress.

Germany holds the EU presidency and Kukies said the bloc's leaders would agree in December on a "very clear path" to implement the new CMU measures proposed last month.

Among them, incentivising long-term investments by amending the bloc's capital rules for insurers is likely to be prioritised, he said.

"One of our lessons learned from the Wirecard scandal is that we do want to strengthen particularly market supervisory powers of European institutions," Kukies said, referring to the collapse of the German payments firm.

Critics says stronger EU supervision is needed to make CMU work.

© Reuters. FILE PHOTO:  The City of London financial district is seen during early morning mist from Greenwich Park in London

"We want to look at best practices in the U.S. and other regions of the world to see how markets supervision at the central level can help avoid some of the problems that we had."

Latest comments

Maybe they relied on UK financial firns before but not anymore - the EU has shifted over more thsn its finances away from UK due to brexit - very fake news unfortunately to the readers
And besides the EU do not want to use the UK financial firms at this time due equivalence so am surprised to this article- However the UK is seeking an equivalence agreement to allow UK-based financial services firms to continue to serve EU customers from the UK after Brexit. So this is Fake News
The EU is pulling its weight due to its own financial hubs so why is germany talking rubbish
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.