With a ‘free port’ deal negotiated behind closed doors, the financial sector will be fine. Meanwhile, others face ruin
An iron law of modern British government says that whatever London wants, London gets. On Monday, with no fuss or publicity, the Bank of England and a group of City interests reached an apparently boring deal in Paris with the European Security and Markets Authority. It follows a similar deal with the European commission last December. Both state, in effect, that, as far as the City is concerned, if there is a no-deal Brexit, Brexit did not happen. It was just play-acting by idiots down the road in Westminster.
Up to £41tn in financial guarantees, insurances, hedges and other derivatives, all within the EU’s regulatory regime, is said to be at risk in the City’s clearing houses. For everyone involved, this is a grownup business, not to be left to the mercies of the likes of Boris Johnson and Jacob Rees-Mogg. The regulators have duly issued licences to the clearing houses, allowing Europe’s banks to disregard EU rules and continue trading on London’s derivatives platforms. Financially speaking, London is to become a “free port”. Sighs of relief all round.
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