The UK's financial industry has warned that forced ''relocation'' of euro-clearing would split markets, bump up trading costs and diminish the status of the euro - as well as threaten thousands of jobs in the City of London. David Pollard reports.
The announcement was expected. But still came as something of a shock. For a London now facing the possibility that - as Britain exits the EU - a chunk of its lucrative clearing business could exit Britain. (SOUNDBITE) (English) EU COMMISSIONER IN CHARGE OF THE EURO, VALDIS DOMBROVSKIS, SAYING: "We need to adjust to the fact that the EU's largest financial centre will be actually leaving the EU ... So that's the rationale for our proposal." That proposal is - first - for the EU to give itself extra powers to supervise euro-denominated clearing in the UK capital. With - as a last resort - extra powers to move that business - if deemed necessary for its own financial stability. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "What we've seen now is the Europeans suggesting that there is now much stronger reason for a lot of that business to potentially be relocated back into Europe. Now, that would lose millions potentially a day in lost business, and London could potentially according to the stock exchange lose around about 100,000 jobs." But London provides clearing for around three-quarters of a euro-denominated derivatives trading business worth around 750 billion pounds a day. It's unlikely to give up without a fight. SOUNDBITE (English) MILES CELIC, CHIEF EXECUTIVE, THE CITY UK, SAYING: "Nobody, literally nobody has come to me from an economic or commercial perspective and made the case for this. So the only driver for this is a political driver. And the important thing to recognize here is that the politics need to be conscious of the economic realities." One thing both sides agree on: that fight may well get fiercer as Brexit gets nearer.