Barney Reynolds, one of the UK’s leading voices on law and the City of London, has championed the need for the financial services to be the keystone feature of the final Brexit trade deal between the EU and the UK.
With EU leaders increasingly reluctant to discuss the ‘Enhanced Equivalence’ legal framework that would allow the EU to use the City of London as its financial capital after Brexit, Mr Reynolds told Express.co.uk that the time could be right for the UK to walk away from talks.
He said: “It’s not a question of walking away permanently. I’m saying that we need to lay out what we want – with sufficient rebuttals for the claims they make on things like systemic risk. Otherwise we’re walking into a bad deal.
“We need to say, ‘look, your negotiating team just doesn’t get it, you keep on coming up with propositions that don’t work for us.
“We’ve told you that we want a frictionless border in Northern Ireland, we’ve told you that we’re not going to break up the UK or be subject to EU law and the ECJ. We’re stopping any discussion of off-target propositions. Here’s what we believe is fair. Come back to us when you’re ready to talk about it.’”
Mr Reynolds has argued that the leading federalist voices – those pushing for greater integration and reform in the EU27 – are dictating terms to the those pushing democratic accountability in Italy, Germany and Poland.
The City chief told Express.co.uk in March that EU was taking a risk with its own economic future by “playing a federal verses member state game”, and “potentially preferring the interests of a tiny number of states within the EU27”.
The EU’s line has not changed since March, and EU negotiator Michel Barnier has made it clear the UK cannot expect a binding arrangement to cover financial services trade. Mr Reynolds says on these terms there’s not much point remaining at the table.
He said: “Businesses in the City say they want a deal. It happens to also be of benefit to the EU. It’s win-win. So what are we actually asking for in return for our £40bn money – which we don’t owe?”
Mr Reynolds says this idea of “crashing out” without a trade deal is also inaccurate, adding “$40bn is an incredible amount of money to spend compensating people and helping them prepare” for WTO rules.
The City chief is growing increasingly frustrated at the UK’s inability to show its “strongest hand”.
He said: “I don’t think that a business negotiator would have approached it like this.
“Theresa May has been incredibly accommodating. She has bent over backwards to accommodate them in the face of pretty aggressive behaviour, for instance calling her at a moment’s notice to talk over propositions that are clearly one-sided.
“She’s kept going. But now is the time to make clear what she expects. This idea that financial services is now off the table – well what’s on the table?”
He added the UK’s massive trade deficit with Germany, France and Spain, Italy will give out negotiators leverage. He said: “If you strip all of that expenditure out of their economy and allow UK consumers to divert their purchasing power elsewhere, outside the EU’s protectionist trade barriers – cold turkey – that would be a massive economic shock for the EU on top of the already fragile state of many EU27 economies.
“UK consumers could purchase quality items from elsewhere in the world – and at good prices since those products will then be subject to the same tariffs as EU products.”
“Do they really want to go that far?”