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U.K. financial services firms will definitely not be able to carry on business as normal within the European Union (EU) after it leaves the bloc, according to Luc Frieden, who has held several portfolios within the Luxembourg cabinet over the past few decades.
In an interview for CNBC on Friday in Luxembourg, Luc Frieden commented:
We need a strong partnership with the United Kingdom, it’s our neighbor and it’s going to remain an important financial services center. Yet at the same time, ‘out’ is not ‘in’ and therefore I think the United Kingdom must know that it’s not going to benefit anymore over the passporting rights it used to have.
So with those two pillars, I think in between a deal can be found but it will be very difficult and it will take a lot of time,” he added, noting that he anticipated the just over 18 months remaining on the timeline was wholly unrealistic.
So-called passporting rights allow financial services firms within the EU to run operations and offer services throughout the European Economic Area (which consists of the EU member states as well as Norway, Iceland and Lichtenstein).
Leaprate has already reported on the EU-UK MiFID Passport issue earlier this year.
Frieden points to the example of Switzerland when he asserts that the U.K. will not be able to maintain these benefits.
I think the United Kingdom can in no way get this passport in the future. Look at the Swiss. The Swiss have always asked for this and they’ve never got it,” he declared.
In these negotiations we always have to keep in mind that we have a partner and a friend that is Switzerland. So these negotiations – Brexit – and the ongoing negotiations with Switzerland have to be kept in mind and have to develop in parallel,” Frieden explained.
According to Frieden there should be a core Europe which resembles a much more federalist structure with some circles around it. One circle could represent countries within the single market and then a further circle, for countries such as the U.K. and Switzerland where the ties are much looser.
A kind of Olympic Rings model for the European Union is probably the most realistic one. It’s not an ‘a la carte’ as that will be too chaotic,” he opined.
Speaking to the renewed vigor in the union since the May election of French President Emmanuel Macron who ran on a strongly pro-European platform, Frieden said that now is the time for member states to seize upon the momentum and deepen their internal relations.
Suddenly Europe becomes again something positive. People dare to talk about Europe,” he affirmed.