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Euro Clearing Market

Volume 630: debated on Thursday 2 November 2017

Since the creation of our Department a year ago, my colleagues and I have engaged widely with the financial services industry and others with a stake in London’s euro clearing market. We have received representations from, and had meetings with, a wide variety of stakeholders, including UK Finance, TheCityUK, the Association of Foreign Banks and the Investment Association, and we will continue to do so.

Because of our current ability to access European markets, the London financial services sector processes transactions worth about £880 billion every day. For context, that is about 100 times our net annual contribution to the EU, and about 15 times the highest sum that has been spoken of as a potential financial settlement. Against that background, does not my hon. Friend agree—

Order. I am glad that the question mark is coming. Questions are terribly long-winded today; it really is very poor. Anyway—blurt it out, man!

Against that background, is it not imperative that we secure a deal on leaving the European Union that will protect access to European markets for our financial services?

My hon. Friend draws attention to the huge importance of the global financial centre in London to the whole of Europe. The Government are well aware of the importance of financial services market access. Our access brings benefits to businesses and customers across the UK and Europe, and we are determined to maintain the City’s competitiveness now and into the future. That is why we are working closely with the Treasury to ensure that we have the strongest possible offer on reciprocal market access in this space.

But it is not just that the euro clearing houses deal with transactions worth €1 trillion a day; it is also the fact that 100,000 jobs in the financial sector could be at risk if Brussels decides that, because of systemic risk, the clearing houses have to move within the EU. May I urge the Minister to take this seriously and to enter into negotiations to ensure that we protect this vital industry?

We absolutely do take this issue seriously. Neither the Council nor the European Parliament has yet reached a position on this proposal. Negotiations are ongoing, and the Council is still discussing the merits of location policy. The UK is very much involved in those discussions. As the hon. Lady knows, the Treasury leads on financial services, including ongoing business-as-usual EU negotiations, and this is an issue on which we continue to work with it very closely.

Of the 75,000 people that the Bank of England predicts could lose their jobs, what percentage might come from the euro clearing sector? Would the Minister support the call from the Bank of England for an amendment to the European Union (Withdrawal) Bill to protect derivatives?

The right hon. Gentleman refers to a figure that I understand the Bank of England discussed but did not produce. With regard to amendments to the repeal Bill, we look forward to debating all of them during its upcoming Committee stage.