Undercutting Britain?

France is hoping Brexit will result in the decline of London as a financial hub.

A leaked memo from Jeremy Browne, the City of London's envoy to the EU has borne a grave warning to British lawmakers. In the memo, Browne said that France is pushing for a “hard Brexit” to undercut Britain.

Background

On June 23, 2016, Britain narrowly voted to leave the European Union stunning the Europe and the world. Britain is deeply intertwined with the workings of EU especially apropos to trade. German Chancellor, Angela Merkel and Dutch Prime Minister Mark Rutte are among those who have openly denunciated this move.

A year later, the UK is amidst negotiations with the European Union where a roadmap for the exit is being drawn up. Critical steps are being drawn towards the shared responsibilities. Among minutiae being worked out include residential agreements, trade agreements, joint programs and financial commitments.

Early on during the negotiations, it was announced that European citizens living in the UK will receive a “settled” status. This came as a relief to the 3 million-odd European citizens in UK. But the biggest barricade will be the “divorce bill.” EU is looking for a financial settlement from Britain especially regarding the commitments made by former British Prime Minister, David Cameron. And this settlement could run into billions of dollars.

Analysis

The memorandum written by Browne was initially leaked to Mail. He wrote it after a contentious meeting the French Central Bank, which he labeled as the “worst” meeting he’s had in the EU. He further said, “Every country, not unreasonably, is alive to the opportunities that Brexit provides, but the French go further, making a virtue of rejecting a partnership model with Britain and seemingly happy to see outcomes detrimental to the City of London even if Paris is not the beneficiary.”

Browne is not the only stakeholder expressing concern about Britain post Brexit. UK’s Chancellor of the Exchequer Philip Hammond admitted in an interview to BBC that businesses were refraining from making investments in Britain. He said companies were waiting to see what UK’s relationship will be with EU before making any moves.

Food policy experts from three universities in UK have published a report postulating that there may be food insecurity once Brexit occurs.

Assessment

Our assessment is that there is sizable uncertainty within Britain and the international community about its future. And France looks primed to seize that opportunity. French President Macron has been able to establish an easy friendship with US President Trump. He has positioned himself as pro-EU.