City will be caught up in the Brexit fish fight
Last night, the European Parliament ratified the UK’s withdrawal agreement.
After years of torturous wrangling following the Brexit referendum, MEPs delivered the final moment of theatre — complete with a rather touching rendition of Auld Lang Syne.
Though the general message was one of friendship and enduring bonds, nobody should be in any doubt that a hard road lies ahead — for everyone.
The UK will cease to be a member of the European Union at 11pm tomorrow night. That’s midnight, Brussels time.
When the sun rises on Saturday morning, what will have changed?
In short: everything — and nothing. The result of the 2016 referendum will have been delivered, but the transition period included in the withdrawal agreement will keep relations at a stand-still until the end of this year.
And what a year it’s set to be. Boris Johnson has set an ambitious timetable for the completion of a trade deal and has vowed not to extend the transition period.
EU leaders have politely scoffed at the idea of getting everything wrapped up by Christmas, but there is talk of a bare-bones trade agreement being put in place, which would be followed by further negotiations.
With talks due to kick off in March, each side is preparing its teams and drawing up red lines.
One of the first great clashes will be over fishing, where the EU is set to demand continued access to British waters and quota shares.
Ireland’s Leo Varadkar has made it clear that this issue will be linked directly to financial services.
Who’d have thought it? Fish for finance. It may seem like a sensible swap, given that the fishing industry is an economic minnow whereas one in 60 people employed in the UK work in Canada.
Across the country, more than one million people work in financial services, a sector which generates more than ten percent of the total UK tax take.
But Johnson has vowed to “take back control” of our waters, and — in contrast — he has said very little about how he intends to safeguard the City.
It’s no surprise, therefore, that the City has moved to safeguard itself. Preparations for a no-deal exit were drafted during the turbulent years of Theresa May and, for the most part, implemented last year. Money has moved, as have people.
Meanwhile, more than 1,000 EU-based firms have applied for a licence to operate in the City should no formal arrangements be in place by the end of the transition period.
Ministers appear to consider the City big enough to look after itself. To some extent, they’re right, but that doesn’t mean that things aren’t about to get bumpy.
The City’s fundamentals remain strong but it will need to keep its wits about it in the coming months, because Brexit is just getting started.
Main image: Getty