France wants ‘fair’ Brexit deal, says Paris’s economy minister
Bruno Le Maire said financial services could not be included within the Brexit free-trade agreement.
France wants a “fair” Brexit deal for the UK, Emmanuel Macron’s economy minister has said.
Bruno Le Maire said there had to be a “good deal” with the UK, but insisted that financial services could not be covered by a free-trade agreement and instead would have to rely on an equivalence regime.
It's important that @theresa_may acknowledged that there would be no financial passport post Brexit— Bruno Le Maire (@BrunoLeMaire) March 6, 2018
Financial services cannot be in a FTA,for reasons of financial stability,of supervision.We have an alternative system that works-it’s the equivalence regime &we should rely on that
His comments came after an aide to the EU’s chief Brexit negotiator warned Theresa May she could struggle to get a Brexit deal which includes the UK’s lucrative financial sector.
In her Mansion House speech on Friday, the Prime Minister set out her plans for Britain and the EU to access each other’s financial markets based on a commitment to maintaining the same “regulatory outcomes”.
However, Stefaan De Rynck, a senior adviser to Michel Barnier, said that, since the global crash of 2008, the EU had increasingly moved away from a system of “mutual recognition” by member states of each others’ rules to more centralised regulation.
Speaking at the London School of Economics on Monday, he said if there was a “market failure” it meant the EU authorities could step in to intervene – which would no longer apply to the UK if it was outside the EU.
Mr Le Maire said the particular circumstances of the financial services industry meant it could not be covered within the scope of a free-trade agreement and the “best solution” would be for equivalence, where both sides recognise each other’s standards.
“We need a good deal. But once again we have to avoid any misunderstanding between the British people and the French people, between the UK and the EU,” he told BBC Radio 4’s Today programme.
“Financial services cannot be in a free-trade agreement, for many reasons – for reasons of stability, for the sake of supervision because there are some very specific rules for financial services.
“So financial services cannot be in a free-trade agreement, but we have an alternative system which is called the equivalence regime.”
Mr Le Maire, who was in London for a meeting with Chancellor Philip Hammond, said: “We want to keep a very strong, a very positive relationship with the UK, but the British people decided to leave the EU and we have to draw the consequences of that sovereign decision from the British people.
“But it does not mean that we want a hard Brexit; we want a fair Brexit which will be in the interest of both the UK and the EU.”
The Prime Minister wants trade to be “as frictionless as possible” and “we don’t want to see the introduction of any tariffs or quotas” after leaving the single market and customs union.
Mr Le Maire said: “Our objective for that new framework should be as little friction as possible between the UK and the EU and the lowest-possible tariffs for the UK, because we have to keep in mind that the UK is a very important trade partner for France and the EU.”
On Monday Mr Hammond told MPs that a deal which did not include financial services would lack credibility.
The Chancellor, who is due to set out the Government’s thinking in more detail in a keynote speech on Wednesday, said the EU would find it impossible to replicate the financial “eco-system” of the City of London if it was excluded.
“I don’t think it is credible. I don’t think it reflects the real world in which we live,” he told the Commons European Scrutiny Committee.
“(Given) the scale of the UK-based financial services sector and the deep involvement it has in the operation of the real economy in the EU, I don’t think it is in anybody’s interest to sever that link in key areas.”
London Calling! Preparing for my meetings with @theresa_may, @DavidDavisMP, @AmberRuddHR, @DLidington and their teams tomorrow, ahead of the vote by @Europarl_EN on the future EU-UK relationship in Strasbourg next week. pic.twitter.com/dhPywN89Tp— Guy Verhofstadt (@guyverhofstadt) March 5, 2018
The latest spat came as the European Parliament’s Brexit co-ordinator, Guy Verhofstadt, was in London for talks with senior ministers, including Brexit Secretary David Davis, Cabinet Office Minister David Lidington and Home Secretary Amber Rudd.
The former Belgian prime minister has warned Mrs May must move beyond the “vague aspirations” in her Mansion House speech if she is to secure a free-trade deal with Brussels.
Earlier, Irish premier Leo Varadkar poured cold water on a suggestion by the Prime Minister that the customs arrangements on the US-Canada border could provide a model for Northern Ireland and the Republic after Brexit.
“I visited it back in August, and I saw a hard border with physical infrastructure with customs posts, people in uniforms with arms and dogs, and that is definitely not a solution that is one that we can possibly entertain,” Mr Varadkar said.
Meanwhile, the DUP will underline its opposition to the EU’s “fallback” position – which would effectively keep Northern Ireland in the single market if no other solution could be found – in talks in Brussels with Mr Barnier.
DUP leader Arlene Foster – whose party props up the Conservative Government at Westminster, said: “We will not countenance any proposal which would create a new border in the Irish Sea between Northern Ireland and Great Britain.”