UK Edition
Punishing City of London will damage EU, says Luxembourg finance minister
The finance minister of Luxembourg has warned that punishing the City of London by forcing firms to shift operations out of the UK after Brexit would not benefit EU countries, but instead lead them to set up operations outside Europe.
Speaking at the London School of Economics, Pierre Gramegna said it was key that "the Number 1 financial centre in the world remains in Europe".
He argued that a "no deal" Brexit outcome would not benefit the UK or the EU, and would instead push financial services away from the trading bloc.
There are thousands of financial institutions registered in the UK, which currently rely on passporting rights to service clients in the EU and vice versa, but if no post-Brexit deal is established, those companies will lose that right.
“I find that a balanced final agreement with the UK, specifically for financial services, is in the interests of Europe itself,” Mr Gramegna said.
Earlier this summer, Luxembourg fought back against claims that it was involved in "very aggressive" behaviour and "creeping regulatory arbitrage" in order to woo finance firms to establish operations in the country.
A number of insurers in the past year have picked the country for their post-Brexit EU hub, and it has been estimated that Brexit could add as many as 2,000 jobs in Luxembourg over the next two years.
However, speaking on Monday, Mr Gremegna urged new trading terms and a transition deal to be established between the UK and EU.
"The pressure on companies is much higher than what governments anticipated," he said.
His comments echo similar calls from the UK's finance industry, which earlier this month published a paper outlining concerns that there was a "very high risk of jobs, capital and inward investment leaving Europe entirely".
"Firms are beyond the planning stage now. If they haven’t done so already, most will be ready to press go on their contingency plans in the New Year," Miles Celic, the chief executive of industry lobby group TheCityUK, said.