I’ve been really puzzled by recent reports that the UK government is thinking about “making future payments worth several billion pounds to the EU to secure privileged access to the single market for City firms to continue trading across the continent.”
It’s all a bit vague, but as far as I know, the City of London depends on many parts of the Internal Market, such as financial passporting, the free movement of people (to allow key personel to move around the EU easily), the free movement of capital, and probably also being within the Customs Union. In other words, we’d probably be talking about something approaching full EU membership (albeit without voting rights) for the City of London – which is, of course, also why they’re expecting to pay a lot of money for it.
I can see several problems with it, however.
Firstly, I’m not entirely sure why the EU would agree to it. Most of the member states are probably already salivating at the thought of poaching valuable financial companies from London.
Secondly, I’m not entirely sure where they would draw the border. Many financial companies are located outwith the boundaries of the historical City of London, so surely they’d want to pick a larger area – perhaps even the entire Greater London area.
Thirdly, this only makes sense if the government is expecting the rest of the UK to be outside the Internal Market – otherwise there wouldn’t be any point in going through a lot of hassle setting this up. However, how is this going to work? If EU citizens can freely move to the City of London but need to go through passport controls to travel to the rest of the UK, how will this happen? Will the government build a wall around London?
I really cannot for the life of me see how this can possibly work. Are they perhaps just trying to calm down the City of London while they figure out how hard a Brexit they want?