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Croatia’s prime minister, Andrej Plenković, whose country is taking over the presidency of the EU, made the bloc’s intentions clear after the prime minister insisted the UK would not be aligned to the bloc’s regulations.
Asked whether the EU would use its power to switch off the City’s ability to serve European clients to gain leverage in the coming negotiations with Britain, Plenković said: “I wouldn’t go into the vocabulary of weapons but what I have learned in international and European negotiations [is] that all arguments and considerations are treated as political.”
A major issue in the EU-UK negotiations over the future relationship concerns the extent to which the British government wants to diverge from the bloc’s rules in various sectors of the economy.
The outgoing governor of the Bank of England, Mark Carney, said this week that it would not be appropriate for the UK to be a “rule-taker” in the field of financial services after Brexit.
The European commission president, however, warned of the economic costs of seeking a loose relationship with the EU. Ursula von der Leyen was also speaking in Zagreb following a meeting with Johnson in Downing Street.
“We have to find a good balance between divergence and being close to the single market,” she said. “There is a difference in being a member state and not. And there are trade-offs between regulatory divergence on one side and access to the single market. This room now has to be explored in the coming negotiations. In June we will take stock of the progress.”
The European commission will make a unilateral decision before the summer on whether it recognises British regulations and supervisory bodies as being sufficiently robust for its financial services sector to continue to work for EU-based clients. [...]