EU’s McGuinness Warns City of London ‘Change is Coming’

London buses pass through the City of London in view of skyscrapers in London, U.K., on Thursday, Jan. 7, 2021. Persimmon Plc, the U.K.’s biggest housebuilder, said the long-term outlook for the country’s housing market remained resilient despite the economic gloom and latest national lockdown. Photographer: Hollie Adams/Bloomberg
London buses pass through the City of London in view of skyscrapers in London, U.K., on Thursday, Jan. 7, 2021. Persimmon Plc, the U.K.’s biggest housebuilder, said the long-term outlook for the country’s housing market remained resilient despite the economic gloom and latest national lockdown. Photographer: Hollie Adams/Bloomberg (Hollie Adams/)

(Bloomberg) — The European Union’s top financial-services official warned the City of London that any deal for the industry remains a distant prospect.

Mairead McGuinness, European commissioner for financial services, said in a Bloomberg TV interview Friday that the EU doesn’t have a fixed timeline for reaching a decision on financial services and emphasized that Brexit would inevitably hinder access to the bloc.

“Change is coming,” McGuinness said. “There is no recreating the single market for financial services when they have decided to leave the single market.”

With the financial industry largely sidelined in the trade deal enacted when Britain finally split from the EU on Dec. 31, firms are racing to adjust to the rupture in European markets. London lost more than 6 billion euros ($7 billion) in daily stock trades to EU venues on Jan. 4, the first business day after the transition period.

Derivatives traders are routing more trades to New York and away from the continent altogether. JPMorgan Chase & Co., Goldman Sachs Group Inc. and other firms that relied on London hubs for decades have moved billions of euros in assets and thousands of staff to new offices in Frankfurt, Paris and across the bloc.

The European Commission and the U.K. have started talks about a memorandum of understanding that will govern how their regulators will cooperate. But whatever occurs with that document, it’s still separate from the so-called equivalence process the two sides will use to determine if firms can access each other’s market.

While the U.K. started 2021 with an almost identical set of rules as the bloc following a post-Brexit transition period, British officials are contemplating modifications in a number of areas. Chancellor of the Exchequer Rishi Sunak has hinted the potential changes could become a “Big Bang 2.0,” akin to Margaret Thatcher’s deregulation in the 1980s.

Any such changes will be closely monitored by the EU, McGuinness said.

“We will move in a way which strengthens our regulation,” McGuinness said. “We do recall the past and light-touch regulation in financial services, and it did no one any favors.”

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