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In part, these economic benefits flow from London’s role as the centre of clearing derivatives in the European time zone. The scale of these markets is almost unimaginably large: each of the euro and dollar denominated sectors are more than 50 times the UK’s GDP. How much of the City’s £75 billion contribution to the UK’s balance of payments is attributable to this business? Despite these inflows, the current account is still in deficit by nearly £100bn (5% of GDP)
The White Paper was explicit that “In highly integrated sectors such as financial services there will be a legitimate interest in mutual cooperation arrangements that recognise the interconnectedness of markets …we will seek to establish strong cooperative oversight arrangements with the EU.” The “Article 50” letter was explicit that the UK “does not seek membership of the single market ... We also understand that there will be consequences for the UK of leaving the EU: we know that we will lose influence over the rules that affect the European economy. But we also propose a bold and ambitious Free Trade Agreement ... it so that it covers sectors crucial to our linked economies such as financial services”. [...]
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