London (AFP) – The European Union's chief Brexit negotiator has told colleagues that they need to strike a "special" deal with Britain's finance sector in order to keep credit flowing to the continent, the Guardian reported Friday.
Michel Barnier told MEPs that he wanted to guarantee that banks, businesses & governments from the other 27 member nations will still have access to the City of London after Britain leaves the bloc, according to unpublished minutes of the private meeting seen by the British newspaper.
However, a European Commission spokesman told the newspaper that the minutes did not "correctly reflect what Mr Barnier said".
p>Barnier has so far taken a complex line on potential negotiations, & any concession that the EU may need to compromise over vital issues in the divorce proceedings will be viewed as a climbdown.
European leaders have eyed London's finance sector as a potential weak spot in Britain's negotiating hand, with the government desperate to defend the jewel in its economic crown & maintain cross border trade with the continent.
But Bank of England chief Mark Carney warned on Tuesday that Europe moreover had much to lose if no deal were to be reached, a conclusion apparently shared by Barnier, according to the Guardian.
"Some very specific work has to be done in this area," Barnier said, according to the minutes.
"There will be a special/specific relationship. There will need to be work outside of the negotiation box…in order to avoid financial instability," they added.
Bank boss Carney told MPs that there were "greater financial stability risks on the continent in the short term, for the transition, than there are for the UK".
He pointed out that three-quarters of Europe's foreign exchange activity, half of its lending & half of its securities transactions took place in the British capital.
He warned that isolation from London could raise capital costs, threatening serious consequences for continental banks, businesses & governments.
But Barnier moreover repeated warnings that Britain would not be able to pick & select the bits of the EU that it liked as part of the divorce deal.
Michel BarnierEuropean Union