Puzzled by the Brexit debacle? Just follow the money

26.02.2019 - Pressenza London

Puzzled by the Brexit debacle? Just follow the money
Paternoster Square, since 2004 the home of the London Stock Exchange (Image by Public domain)

Finally it became clear. Thanks to an article by Simon Jenkins in The Guardian  we now know that “With a ‘free port’ deal negotiated behind closed doors, the financial sector will be fine. Meanwhile, others face ruin”. He explains : “An iron law of modern British government says that whatever London wants, London gets. On Monday, with no fuss or publicity, the Bank of England and a group of City interests reached an apparently boring deal in Paris with the European Security and Markets Authority. It follows a similar deal with the European commission last December. Both state, in effect, that, as far as the City is concerned, if there is a no-deal Brexit, Brexit did not happen. It was just play-acting by idiots down the road in Westminster.

“Up to £41tn in financial guarantees, insurances, hedges and other derivatives, all within the EU’s regulatory regime, is said to be at risk in the City’s clearing houses. For everyone involved, this is a grownup business, not to be left to the mercies of the likes of Boris Johnson and Jacob Rees-Mogg. The regulators have duly issued licences to the clearing houses, allowing Europe’s banks to disregard EU rules and continue trading on London’s derivatives platforms. Financially speaking, London is to become a “free port”. Sighs of relief all round.

“The City deal is, of course, a special case. It is in the EU’s interest as much as in Britain’s, and not reaching it would have been mildly catastrophic. “The important thing is we have certainty,” David Bailey of the Bank of England told the Financial Times. “We have time to reflect on what the future arrangements will look like.” Or as Steve Grob of ION Markets – its motto: We need to disrupt the status quo – declared: “You can’t start moving trillions of dollars of business overnight.” The deal was “welcome common sense and practicality on what was a trillion-dollar game of chicken”.

The article goes on to explain that The City, the UK financial sector is saved and given total priority whilst the real economy, the production, the consumer goods, medicines, basic needs are all being ignored. Prime Minister May has come and go pretending to negotiate the vital deal, whilst behind closed doors the real deal was being made. Her City bosses must be really pleased whilst nobody else understands how she is still in post.

 

Categories: Economics, Europe
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