Richard North, 24/10/2020  

An interesting article in the Mail tells us of claims that £1 trillion in financial sector assets have been shifted to Europe.

The trigger is, of course, the end of the transition, when financial firms based in the UK will lose their "passporting rights" which, hitherto have enabled them freely to sell funds, debt, advice and insurance to clients across the territories of EU Member States.

"City bosses", we are told, had hoped ministers could thrash out replacement deal with EU officials but have become increasingly frustrated over the lack of progress. They are now complaining that the UK's financial sector is the "forgotten child" in trade talks, playing second fiddle to smaller industries such as fishing.

Why they should be put out, though, is something of a mystery. We can go back to 20 November 2017 when Michel Barnier gave a speech to the Centre for European Reform on "The Future of the EU", in which he commented that, on financial services, there were UK voices suggesting that Brexit did not mean Brexit. But, Barnier said, "Brexit means Brexit, everywhere".

Some commentators, he observed, were saying that there would be no changes in market access for UK-established firms. They were saying that joint UK-EU Rules would be decided in a new "symmetrical process" between the EU and the UK, and outside of the jurisdiction of the European Court of Justice.

But that, said Barnier, would contradict the European Council guidelines of April 2017, which stressed "the autonomy of EU decision-making, the integrity of our legal order and of the Single Market".

Thus, he said, the legal consequence of Brexit is that UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.

Barnier did offer a small crust, by way of compensation, saying that the EU would have "the possibility to judge some UK rules as equivalent, based on a proportional and risk-based approach", in those areas where EU legislation foresees equivalence.

In January of the following year, however, we saw reports that the EU had rejected a City plan for free trade in financial services, and that the industry was to lose out from leaving the Single Market.  Yet, as late as February of this year Barnier was rubbing this in, in no uncertain terms.

In an address to the European Parliament, he told MEPs that London should be "under no illusion" on financial services as there would be "no general, global, permanent equivalence" with Britain. He added, "I would like to take this opportunity to make it clear to certain people in the United Kingdom ... that they should not kid themselves about this".

It is rather perverse, therefore, that there still seems to be some expectation that things can go any other way. Yet still there are wibblers who seem to believe that there is a possibility of change.

For instance, Catherine McGuinness from the City of London Corporation complains that it was "'extraordinary" that ministers and EU officials appear to be spending so much time on fishing rights rather than our financial services industry – as if it would make any difference.

Then, Allie Renison of the Institute of Directors – always one to grab the wrong end of the stick – is saying: "Financial services really need to start being treated in negotiations for what they are: a huge contributor to the UK economy" – apparently unaware that the ship has long since sailed.

However, by no means all firms are living in cloud-cuckoo land. Wall Street giant JP Morgan has already switched £180 billion – or 7 percent of its global assets to Frankfurt. And Barclays is now the biggest bank in Ireland after switching £150 billion to Dublin.

Says the Mail, other big names – including Bank of America, Goldman Sachs and Morgan Stanley – have already prepared European hubs and shifted assets out of the UK to Ireland, Germany, and France. According to accountancy firm EY, assets worth £1.2 trillion have been switched from London to continental Europe since the Brexit vote in June 2016.

Since the referendum, 88 of the 222 firms it has tracked have earmarked at least one location in Europe where they plan to move staff. Frankfurt has proved the most popular destination, followed by Paris. And EY says that preparations have been stepped up in recent weeks as prospects fade for a financial services deal.

That there ever was any expectation is a testament to the unreality of the post-Brexit discourse, where despite constant repetition of the basics, crucial issues simply don't seem to sink in.

Much the same can be said of the Guardian article yesterday, which headlines: "UK presses for use of faster passport gates at EU airports post-Brexit".

Johnson, we are told, "has clashed with Brussels" over an 11th-hour attempt to save British passport holders from hours of delays at European airports from the end of the year, with the UK government seeking continued use by UK nationals of the automatic e-gates used by EU nationals at airports and Eurostar terminals.

The move, says the Guardian is seen by the European Commission as an attempt to keep Britons in faster lanes rather than having to queue up with the rest of the world after the end of the transition period. But the Commission is also adamant that giving UK nationals such a right would breach EU law.

We seem to be back where we were in November 2017 where there are still people – and many in government, including the prime minister, who still seem to think that Brexit does not mean Brexit, when this becomes inconvenient. But, as Barnier said then, "Brexit means Brexit, everywhere".

Thus, when it comes to UK travellers' convenience, we will have to take it as it comes. The Commission has advised the Member States that the e-gates could be used where a UK national is exiting its territory, but not on entry.

After the transition period end, Member State will have to have a national entry-exit system and passports of the British nationals will need to be stamped, reducing the benefits of use of the automated border control.

Officials at one of Europe's biggest airports, Schiphol in Amsterdam, through which roughly five million people travel from the UK each year, expect British travellers to face considerable delays. As it stands, Britons spend on average around 25 seconds at the passport control desk at Schiphol. It is estimated this will increase to 40-45 seconds next year due to the need for additional document checks.

With each person taking longer to get through passport control, it could take between 50 minutes and an hour more for a passenger on a busy flight to get through the system.

Such are the joys of Johnson's version of Brexit – something which never needed to happen but is now, effectively unavoidable. And there are many other examples to come, which the legacy media – and the politicians are just beginning to discover.

It really is a great pity that the media wasn't substantially more proactive earlier in the debate, letting people know the practical consequences of the different exit options. But, trivia and superficial analysis has too long been the fare of the media, and now we are paying the price.

Also published on Turbulent Times.

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