EU-UK relations have been ‘bumpy’ since Brexit says Frost

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Julian Jessop, an economics fellow at the Institute of Economic Affairs, who has previously worked for the Treasury and global banking firms, has backed the long term future of the UK’s finance sector. This week it was announced stock exchanges in Amsterdam traded 9.2 billion euros ($11.15 billion) a day in January, compared to London’s 8.6 billion, according to the Cboe exchange, which operates in both cities.

The shift to the Dutch capital has been blamed on Brexit, with euro-denominated trades moving to the EU due to Brussels rules.

But Mr Jessop was unconcerned by this week’s announcement and said it would have minimal impact on Britain’s long term future.

“Right from the beginning of the year we knew that a lot of euro-denominated currency trading was going to move from London,” he told Express.co.uk.

“It’s a relatively unimportant bit of business.

“Euro-denominated equity trading, and equity trading more generally, is pretty small in size compared to other markets.

“It’s also a relatively low margin business and it’s also basically commoditised so there aren’t many jobs and there isn’t much tax revenue involved.

“I don’t think it’s an issue at all that we’ve lost a big chunk of that business.”

EU rules require EU-based firms to trade interest rate swaps and credit default swaps either inside the bloc or from a country whose standards have been recognised by Brussels.

The UK has not been granted such so-called “equivalence” yet.

The EU has said it needs information about Britain’s intentions to diverge from EU rules before granting such access.

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However, Prime Minister Boris Johnson’s spokesman said London had already supplied the necessary paperwork, adding it is in “no one’s interest” to block UK access to the EU.

Mr Jessop told this website Brussels’s “protectionist game” would come back to haunt the bloc.

He said: “The short term impact is negative, but a small one. The bigger picture though is what’s going to happen over the next few years.

“It’s clear the EU is playing hardball, there’s no rational basis for failing to extend equivalence or mutual recognition to the UK.

“They are clearly just playing a protectionist game to support their own financial sector.

“But that’s ultimately bad for them because any increases married to trade is bad for both parties, including EU companies that won’t be able to raise money as cheaply as they would otherwise have done.

“But it’s also sending out a terrible signal to the rest of the world.

“If I was a US-based investment bank or an Asian investment bank looking at how the UK Government and the EU governments have behaved, I would be much more willing to locate somewhere like London.”

He added: “I think the EU’s really shooting itself in the foot here.

“It has a small short term gain from this, in the longer term this is actually a positive for Britain, because we’re standing out as the grown-up in the room.”

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