A hugely lucrative London business could be living on borrowed time because of Brexit.
The European Union plans to give itself powers to move euro clearing away from the city’s financial sector to the EU after Britain leaves the bloc in 2019.
A draft law with that in mind has been presented.
Speaking in Brussels, European Commission Vice President Valdis Dombrovskis told reporters on Tuesday: “We…need to prepare for the departure of the EU’s largest financial centre from the single market. That means taking action to preserve financial stability and provide certainty to businesses.”
The financial industry has warned that risks of forced “relocation” include bumping up trading costs and diminishing the euro’s status as well as threatening thousands of jobs in the City of London.
What is more, some think euro clearing could actually move elsewhere.
“It is being seen as something of a test case almost for some of the political wrangling that we’re going to be seeing over the next months,” said Richard Hunter, Head of Research with Wilson King Investment Management.
“Some of this clearing could actually go to the US. Some US companies already have the authority to be able to clear in the EU. So potentially, rather than going to the EU, the clearing could actually move to the States.”
Up to 100,000 jobs could be at risk if clearing leaves London.
The draft law needs approval from EU states and the European Parliament.