Brexit outrage: How France called for City of London to be sidelined as financial hub

FRANCE called for the City of London to be sidelined as Europe's financial hub even before Brexit, unearthed reports reveal.

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EU negotiators have been accused of politicising the UK’s financial services sector in Brexit trade talks, after suggestions Brussels could shut the City of London out of its markets if the UK does not budge on other areas during negotiations. A senior EU official told City A.M. that the bloc will only grant the British financial services sector access to its lucrative EU markets if it is “within our own interests” and if the UK shifts its position on key areas in trade talks, such as the EU’s fishing access to British waters. The news came as the two sides began the third round of negotiations via conference call last month, which ended with both sides complaining of deadlock in key areas such as EU access to UK fishing grounds, governance, and the so-called level playing on common standards and competition.

The EU source said: “Just because we have made the [equivalency] assessment in June, does not mean we will make the decision in June.

“The UK is requesting access to a massive market – we’ll act within our own interests and we will only sign up to a deal that is in our own interests.”

A spokesperson for the UK negotiating team hit back at the EU’s tactics by saying the “politicisation of financial services” was “in no one’s interests and the EU knows that”.

As tensions rise and the clock ticks down, unearthed reports reveal how France has been trying to dethrone London as the continent's banker for almost a decade.

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Brexit outrage: How France called for City of London to be sidelined as Europe's financial hub (Image: GETTY)

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City of London (Image: GETTY)

According to a throwback report by The Telegraph, in 2012, the former Governor of the Bank of France, Christian Noyer, said London should have been stripped of its status as Europe's main financial hub and sidelined to allow the eurozone to “control” transactions within the 17-nation bloc.

Mr Noyer told the Financial Times that there was "no rationale" for allowing the eurozone's financial centre to be "offshore".

He said: "Most of the euro business should be done inside the euro area. It's linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency.

"We're not against some business being done in London, but the bulk of the business should be under our control. That's the consequence of the choice by the UK to remain outside the euro area."

Mr Noyer's broadside was one of several outspoken public attacks that had been launched by French leaders on Britain.

Shortly before Standard and Poor's stripped France of its AAA credit rating earlier that year, Mr Noyer said that Britain's rating should have been cut before that of France as the UK had "as much debt, more inflation, less growth than us".

Jean–Pierre Jouyet, the former head of the French financial regulator, described the right–wing of British politics as "the world's stupidest".

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Former governor of the Bank of France Christian Noyer (Image: GETTY)

Michel Barnier, now the EU’s chief Brexit negotiator, was also actively trying to to sap London's strength as Europe's financial centre at the time.

In 2010, the former French minister was appointed European Commissioner for Internal Market and Services and was asked to clean up Europe’s financial services sector.

In Britain, Mr Barnier immediately faced criticism.

According to a 2010 report by the Daily Telegraph, the main accusation appeared to be that the former French minister was more likely to side with then President Nicolas Sarkozy than he was with the leaders of London’s under-pressure finance sector.

As the publication put it, “the Frenchman was seen as a threat”.

The UK’s fears appear to have been justified, too.

In a 2011 Financial Times report, EU correspondent Alex Barker noted how the myriad of Brussels proposals had left Britain’s financial world reeling and ministers saw such measures hurting the sector or crimping UK regulatory powers.

That nervousness reportedly burst into the open, with David Cameron moaning about the City being “constantly under attack”.

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The EU's chief Brexit negotiator Michel Barnier (Image: GETTY)

For the former Prime Minister – and figures from the UK’s financial industry – the problem was not one single issue but rather a worrying trend.

Anthony Belchambers, chief executive of the London-based Futures and Options Association told the publication at the time: “Red tape, ill-informed tax initiatives, protectionist policies and high ‘pass on’ costs will damage the international reach of the City.”

In his FT report, Mr Barker also pointed out that the underlying alarm in London was a more visceral fear; that Mr Barnier and his backers had been using the regulatory system to sap London’s strength as Europe’s financial centre.

The EU correspondent wrote: “Already, rivals such as Paris and Frankfurt are on the march.

"UK Treasury officials are suddenly fielding calls from companies offered tax breaks to move to the French capital.

"Regulators are weighing whether to permit NYSE Euronext to merge with Deutsche Börse, giving the world’s largest exchange a Dutch postal address and a formidable reach across Europe.

"France and Germany 'see the City as ripe for plundering', in the words of one European official.'

"'The British are only just waking up to it,' the official adds.

"'And in some cases they’re too late.'

"Furthermore, analysts warn, the drive for tighter eurozone economic governance could leave Britain on the sidelines of an EU realignment, with lasting consequences for the City."

Mr Barnier always dismissed complaints against him as “nonsense”.

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