Following the vote by the U.K. to leave the European Union, French politicians have maneuvered to wrest away a share of Britain’s coveted banking industry. As bankers in the City of London and abroad warned before the referendum, departing Europe could jeopardize the U.K.’s central place in the EU’s $810 billion financial services market.
French officials have wasted no time turning those warnings into a reality.
“What is the strength of London’s position? It is that being in London means you are in Europe,” Finance Minister Michel Sapin asked French media Wednesday. “But in the future there would be no point being in London.”
In particular, Sapin said, Britain could lose its “passport” into European markets, an aspect of EU trade policy that allows the U.K. to do business across national borders with little fuss.
On Wednesday, author and journalist Ben Judah published a series of tweets laying out the situation on the ground.
The European Economic Area, or EEA, agreements govern the relationship between the EU and European countries not in the EU, like Norway and Iceland. The crucial issues that the U.K. would have to negotiate in a new agreement with the EU would include how it can limit migration, what access businesses have to the tariff-free single market, and passporting for the financial sector.
By extending compromises on the first two issues but restricting the financial passports, Paris hopes to give London a deal that would satisfy the populace — whose chief concerns include immigration and quality of life — while muscling into Britain’s economic turf.
Any gain for Paris or Frankfurt be a huge economic blow to the U.K. The financial services industry accounts for 12 percent of the British economy and employs 2.2 million people throughout the country.
Many of those bankers work for banks headquartered elsewhere. Multinational banks use London as an entry point for the European market. Banks including JPMorgan Chase and Goldman Sachs, based in the U.S., have warned that the Brexit could force them to relocate elsewhere in Europe — a process that has already begun.