The EU may look to negotiate a “special” relationship with the City of London as part of the Brexit process to avoid "financial instability", according to reports.
Unpublished minutes detailing a closed-door meeting between MEPs and Michel Barnier, the French politician charged with negotiating Brexit from the European side, indicate the EU may be hesitant to cut off access to Europe’s biggest financial centre.
Negotiators are fearful of destabilising the delicate economic environment which exists in many EU countries and creating monetary difficulties.
The remarks are the first indicators of a less hard line European stance towards Britain for voting to leave the bloc.
According to the minutes, published in the Guardian, Mr Barnier referenced the City of London and said: “Some very specific work has to be done in this area. There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”
However, a European commission spokesman told the newspaper the minutes did not “correctly reflect what Mr Barnier said”.
Some European leaders had previously indicated they wanted to take advantage of Brexit and entice financial businesses from London to the continent.
The City of London relies on a system called ‘passporting’ to work across the European Economic Area but the UK is set to lose this once it exits the EU.
This will make it more difficult for companies based in London to do business in Europe, making the UK’s financial sector potentially vulnerable.
But a “special” agreement with the City would ease anxieties over this issue.
It would also indicate the EU does not want to ‘punish’ the UK over Brexit, as some have predicted, for putting the bloc in jeopardy.
Instead, Mr Barnier struck a more conciliatory tone in the minutes, saying there would be “no aggressiveness, no revenge, no punishment” in the “unique and extraordinary negotiation” of Britain’s withdrawal.
However, he maintained outcome would still have to show that remaining in the EU was the best option for members.
