by Don Quijones, Wolf Street:
But a majority of the French want out of the EU too!
As support for a British exit from the EU strengthens, at least according to the latest polls that give some people whiplash, policy makers on both sides of the English Channel are finally beginning to think about the days, weeks and months after June 23. Some countries, such as Germany, seem more inclined to favor a soft, pragmatic approach in the event of a Brexit, while others, led by the government of France, are calling for a more punitive response.
As originators of the phrase “Pour encourager les autres,” (to encourage the others), it is fitting that France is leading calls for Brussels to punish the UK if its public has the temerity to vote to leave the EU. Among the measures under discussion are to expedite Britain’s removal from all EU treaties rather than let negotiations drag on, as well as restrict the “passporting” of financial services, which allows foreign-owned companies to do business with the EU via offices located in Britain.
“I would be very tough [on this point],” said Sylvie Goulard, a French MEP who sits on the committee for economic and monetary affairs. “I see no reason to give passporting to a country that decides in a sovereign way to leave the EU… The day the U.K. leaves … you cannot consider the British supervising authority as an authority of the EU.”
Such a response could have a devastating impact on the UK’s core industry, financial services.
The City of London financial district is the place with most at stake in the Brexit debate. Its two biggest rivals, Paris and Frankfurt, are vying to take a piece of the action. If Britain left the EU, member countries might re-evaluate whether to recognize clearing houses such as LCH.Clearnet, and may push to force all clearing houses to be based inside the EU — as the European Central Bank has already suggested should be the case [Who’s Really Most Afraid of Brexit? And Why?].
A Britain-less EU might even try to draw business away from the City of London. “I can tell you there is already intense thinking about creating a financial hub on the Continent,” said Elisabeth Guigou, Socialist head of the foreign affairs committee in France’s lower house National Assembly. The fact that Frankfurt is home to the European Central Bank’s lavish headquarters makes it the most likely contender but that won’t stop Paris from laying claim to its share of the spoils.
But ultimately it’s not opportunism that is driving the French government’s calls for a hardline approach to a post-Brexit Britain; it’s fear. A vote to leave the EU has the potential to unleash a mass stampede towards the EU’s doors — doors that as yet do not open from the inside. The French government would clearly like to keep it that way.
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