LONDON:
Banks with large London operations say they will step up lobbying European
officials because they are running out of arguments to convince the British
government the industry needs single market access after Britain leaves the
European Union.
Banks
have focused on pressuring British officials to push for as much market access
as possible since voters decided seven months ago to leave the EU. They held
fewer meetings with European officials, according to several senior sources in
the financial services industry.
The
focus is shifting because after scores of meetings and research reports, banks,
which say they may begin moving staff and operations out of London in the next
few months if there is no clarity, feel they are running out of new points to
make.
Prime
Minister Theresa May said on Sunday she was not interested in Britain keeping
"bits" of its EU membership, interpreted by some as signaling she
will favor immigration controls over access to the single market.
Banks
are now planning a new round of lobbying to highlight how a hard Brexit could
harm the EU and the UK. They have identified French politicians, EU regulators
and government officials, as key groups to win over.
"The
battle for Britain is over, the battle for France is about to begin," said
one senior lobbyist.
Another
senior lobbyist for one of the major global banks said he will spend more time
in Brussels this year to target the EU's chief Brexit negotiator Michel Barnier
and his teams as well as Didier Seeuws, a Belgian diplomat, who is helping
coordinate the Brexit negotiations.
Another
lobbyist said he is planning to visit Paris to meet with French politicians and
regulators later this month.
Britain's
position as Europe's financial center is emerging as one of the main collision
points in the Brexit talks. Some European politicians see an opportunity to
challenge British dominance of finance after decades of viewing its
free-wheeling "Anglo-Saxon" model of capitalism with suspicion.
EU
leaders like French President Francois Hollande have said they plan to weaken
Britain's grip on finance by, for instance, demanding the lucrative business of
clearing euros should move to the euro zone.
Finance
is Britain's most important industry, accounting for about a tenth of its
economic output and is its biggest source of business tax revenue.
But
Britain also acts as "the investment banker for Europe", Bank of
England Governor Mark Carney said in November, with more than half the equity
and debt raised for European governments and companies done in the UK.
Banks
will argue that Europe depends on the strength and the depth of the financial
sector in London to service its economy and companies. If access to the EU is
cut off, regional financial stability could be in jeopardy, they will say.
UK-based
banks had total outstanding loans of more than 1.1 trillion pounds to European
companies and governments at the start of 2016.
The
British government has also privately appealed to financial organizations to
make their case in Europe if they want a transitional period where their
ability to operate in the EU would be phased out gradually over several years.
Finance
minister Philip Hammond told a meeting of finance executives at the end of
November they should lobby European governments if they want to secure a
post-Brexit transitional deal, according to two people who were present.
Hammond
made the comments at the annual dinner of the All-Party Parliamentary Group on
Wholesale Financial Markets and Services, attended by executives from the major
British and international banks, according to the people who attended.
"He
basically said we need a transitional deal to avoid a cliff edge effect, but
the EU also needs to argue for it," one person at the dinner said.
"He was implying that we need to help the government prepare the
ground."
A
Treasury spokesman, when asked for comment, reiterated Hammond's previous
statements to lawmakers that Europe will harm itself if they use Brexit to
undermine London's position as the region's principal financial center.
Bankers
say more work is needed on forging a consensus between Britain and Europe on
what any transitional deal may look like. European officials say they will not
discuss such a deal before Britain triggers Article 50 of the EU's Lisbon
Treaty to start the process of leaving the EU.
"Everyone
has a different definition of what it means in Europe and within Whitehall.
We're trying to get a common view on what transition means," one of the
lobbyists said.
The
British government's relationship with business has gradually improved after
months of friction after the vote. It hit a low point during the Conservative
party conference in October when May attacked a "rootless"
international elite and officials privately suggested banks would get no
special favors in the Brexit negotiations.
Nevertheless,
banks feel they have largely finished putting forward their case for single
market access. "We feel we've been lobbying the UK government to death.
We've presented every piece of evidence, every report, research, you name
it," one of the lobbyists said.
"We've
been repeating ourselves for a month or two now... What else do they really
need from us now?" One government official, who asked not to be named,
said regular dialogue with the finance sector will continue, but the number of
meetings may reduce. "
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