Germany to Demand U.K. Pay for Post-Brexit Bank Access

Germany will demand the U.K. pay for the privilege of its financial firms having access to European Union markets after Brexit as Chancellor Angela Merkel’s government maintains a hard-line stance against a bespoke trade deal.
The U.K. cannot hope for a trade deal that includes financial services unless Britain agrees to make substantial contributions to the EU budget and adheres to European law, according to German officials from two key government departments in Berlin. Both asked not to named discussing internal government strategy.
Even before the negotiations start on Britain’s future relationship with the EU, Germany’s position risks thwarting the U.K.’s aim of securing a tailor-made deal. Prime Minister Theresa May’s government regards Germany’s stance as crucial -- both Chancellor of the Exchequer Philip Hammond and Brexit Secretary David Davis are due in Germany on Wednesday to meet business groups and make the case for a wide-ranging Brexit deal.
In a joint article for German newspaper Frankfurter Allgemeine Zeitung published the same day, Hammond and Davis said they want a trade deal covering financial services to ensure that after the 2008 crash, “we do not put that hard-earned financial stability at risk.”
But Germany will reject any attempt to include financial services in a post-Brexit trade deal unless Britain drops its opposition to substantial budget payments, the government officials said. Otherwise, the U.K. is simply “cherry-picking” its favored aspects of EU membership without having to share any responsibility -- something Germany has explicitly rejected from the outset.

Norway or Switzerland

Non-EU countries Norway and Switzerland do have access to Europe’s financial services market, but they pay for the privilege. Canada, whose free-trade deal the EU says the U.K.’s will most closely resemble, doesn’t pay into the EU budget -- and financial services barely feature. According to the German officials, the U.K. must therefore choose between the Swiss or Norwegian models if financial services are to be included.
The EU and the U.K. are now in the process of deciding exactly what they want to get from the negotiations. They are due to begin formally discussing their future trade ties after an EU summit in March, when EU chief Brexit negotiator Michel Barnier will present negotiating guidelines for adoption by leaders including Merkel and French President Emmanuel Macron.
Germany is to urge Barnier to include in his guidelines the principle that the U.K. must accept EU obligations -- such as submitting to the jurisdiction of the European courts -- if it wants access to the EU single market. That’s also something that the British government has long opposed.

Barnier Stance

On Tuesday, Barnier reinforced his hard-line stance on banking, after previously warning it will form no part of the trade agreement and saying “passports” for the U.K. finance industry will end.
He took the opposite view from Hammond and Davis, saying that giving U.K. easy access to EU financial markets could undermine rather than reinforce stability.
“We simply want to remain in charge of our own rules and the way in which they are applied,” Barnier told an audience of Belgian business leaders in Brussels. “Let us not have short memories, the financial crisis was not that long ago; it cost us a lot and it destroyed value and millions of jobs.”