EU caves: UK secures huge victory over London finances – Brussels give in after threat

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The UK is a world leader in the financial markets with City-based firms acting as the middlemen for buyers and sellers across the globe. European Union banks face being cut off from vital “clearing houses” at the end of the year if Brexit trade talks collapse. Those EU banks “clear” around £670 trillion a year – with the vast majority of business going through London.

With eurocrats becoming increasingly worried about the prospect of a no-deal Brexit, they have signed off on plans to give European firms an 18-month licence to continue using London.

European Commission vice-president Valdis Dombrovskis said: “Clearing houses, or CCPs, play a systematic role in our financial system.

“We are adopting this decision to protect our financial stability, which is one of our key priorities.

“This time-limited decision has a very practical rationale, because it gives EU market participants the time they need to reduce their excessive exposure to UK-based CCPs, and EU CCPs the time to build up their clearing capability.

“Expires will be more balanced as a result. It is a matter of financial stability.”

The move comes despite years of posturing from Brussels and failed attempts to lure British business to EU financial hubs such as Paris and Frankfurt.

A memo circulated to European capitals last week told them more than 90 percent of euro trades are “cleared” through London.

In the note, eurocrats also warned cutting off access to the City would “create major challenges” for EU states in managing the financial fallout from the coronavirus pandemic.

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