Boost for the City as EU countries fail to agree which of them should take euro trading business from the UK

PLANS to remove the UK's role as the main European finance hub have hit a roadblock thanks to squabbling EU countries.

Eurocrats are keen to stop London-based companies from being able to oversee trades in euros after Britain leaves the EU.

However, Germany, France and Italy have refused to sign up to a deal which would move the business to mainland Europe.

They all want to grab the largest possible slice of the industry – and refuse to submit to the supervision of the European Central Bank.

The news is a boost for post-Brexit Britain – and defies Project Fear warnings that the City would be unable to survive outside the EU.

The behind-the-scenes row focusses on the obscure business of clearing, in which a firm acts as a middleman between the buyer and the seller of a financial product.

London, which is by far Europe's biggest finance centre, hosts 90 per cent of euro clearing even though Britain does not use the single currency.

The British companies responsible for the trading are overseen directly by the ECB under a deal hammered out two decades ago.

But authorities in Germany, France and Italy have refused to accept regulation from the European bank even though they want to start hosting the trades instead of the UK.

Instead, they want to regulate the trading on a national basis as they battle each other to grab as much business as possible.

The disagreement is currently preventing the ECB, the European Commission and national governments from presenting a united front in Brexit talks.



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A source told Reuters news agency: "The question is who would supervise, the ECB or the national central banks.

"There is a risk now that we won't be able to agree on a proposal and the Commission will decide for us."

Another issue is that banning non-EU countries from handling euro trades would infuriate the US, because Wall Street currently hosts a significant portion of the business.

Germany's finance minister admitted today that not all euro clearing would end up leaving London even after Britain has quit the EU.

And ECB president Mario Draghi warned that the EU would lose some of its oversight of the European financial system after Brexit.

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