Brexit talks must be quick, City of London at risk of losing "EU passport"

By Reuters/ John Irish and Paul Carrel   June 25, 2016 | 01:10 am PT
Brexit talks must be quick, City of London at risk of losing "EU passport"
Photo by Reuters/Susana Vera
Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said on Saturday, adding London's financial center was at risk of losing its prized "EU passport".

Banks based in London rely on a so-called EU passport to operate across the bloc's capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU.

The City of London will not be able to keep that passport if Britain leaves the EU's single market of trade in goods and services, Villeroy told France Inter radio.

"There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules," he said.

"It would be a bit paradoxical to leave the EU and apply all EU rules but that is one solution if Britain wants to keep access to the single market."

Central banks are efficiently dealing with the fallout of Thursday's UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: "The euro is a solid currency."

"What happened on Thursday is bad news, first of all for Britain," he said. "Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy."

Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 percent for 2016.


A woman holds a sign in Westminster, in central London, Britain June 24, 2016. Photo by Reuters/Phil Noble

France presses for quick EU divorce with Britain, Germany cautious

France's foreign minister called on Saturday for the European Union to move ahead quickly to seal the terms of a British exit from the bloc, arguing that the other 27 members needed to give the EU new purpose or else risk populism taking hold.

"Negotiations have to go quickly in the common interest," Jean-Marc Ayrault said on his way to a meeting in Berlin of foreign ministers from the six founding members of the EU - Germany, France, Italy, the Netherlands, Belgium and Luxembourg.

Britain voted on Thursday to leave the EU, forcing the resignation of Prime Minister David Cameron and dealing the biggest blow since World War Two to the European project of forging greater unity.

The EU's other members and the British government must now work out the terms for the country's departure and future relationship with the bloc.

German Foreign Minister Frank-Walter Steinmeier, hosting Saturday's meeting, struck a more cautious note but said it was essential to preserve the "project of freedom and stability" that the six founding EU members had forged.

"It is completely clear that we now have a situation that allows for neither hysteria nor paralysis," Steinmeier said, adding that EU leaders must address the challenges of migration, security and unemployment.

"We must not resort to hectic activity, and act as if all the answers are ready. But after the British decision we mustn't lapse into depression and inactivity," he told reporters.

Ayrault said Saturday's meeting should not focus too much on a plan drawn up by German and French officials for a flexible EU that would envisage "allowing space" for member states that are not ready for further integration. "We shouldn't fixate on the idea of flexibility. There already is a two-speed Europe," he said.

Looking to a summit meeting of EU leaders, including Cameron, next week, the French minister added: "There will be a lot of pressure on Cameron on Tuesday to move ahead."

"We have to agree between the 27 to say that after a certain date this episode is finished," Ayrault said, though he did not say such a deadline would be set on Tuesday. "We have to give a new sense to Europe, otherwise populism will fill the gap."

Related news:

> 'Brexit' is a watershed moment for Europe, Germany's Merkel says

> Obama tries to limit fallout from British EU exit vote

> Britain decides to leave the European Union, sterling suffers biggest ever fall

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