Michel Barnier, who led the EU’s Brexit negotiations, has signalled Brussels will not climb down from its demands of the UK if a financial services deal is to be secured.
He told a business summit in Brussels the EU still needs further clarification from the UK before making a decision on financial services equivalence – allowing UK firms access to the bloc after so-called passporting rights were lost on 1 January.
He made his remarks hours after the governor of the Bank of England, Andrew Bailey, warned that the EU’s demands of the UK on future rules – currently aligned with those of the European Commission – were excessive compared to international standards.
Mr Bailey had already rejected the notion of the UK becoming an EU rule-taker and repeated that assertion in his virtual address to financial executives on Wednesday evening.
Brussels is keen to expand its own financial services sector that had been dominated by London throughout the UK’s membership of the EU.
But it is fearful of a bonfire of red tape that would make the City and wider financial services industry more competitive.
The status quo has resulted in a blow to the Square Mile.
Statistics reported by the Financial Times confirmed that London had lost its crown last month as Europe’s largest share trading centre to Amsterdam.
The data from Euronext Amsterdam and the Dutch arms of CBOE Europe and Turquoise showed a fourfold increase in average daily trades compared to the previous month when the Brexit transition period neared its end.
Any recovery of that title for London in the short term may depend on any equivalence deal – with talks continuing.
Mr Barnier used his remarks to repeat a warning that member states should watch for possible circumvention of the current rules by UK financial services firms.
“The EU national authorities will be very vigilant in the next weeks,” he said. “I recommend everyone to be careful.
“I can just repeat that the equivalence decisions are and will remain unilateral of each party and are not subject to negotiation.”