Chat with us, powered by LiveChat

German minister responsible for its financial center said on Monday, adding that Frankfurt would grab business from London.

While France has long made no secret about its ambition to take business from London, German politicians have largely avoided such statements and Tarek Al-Wazir’s show a desire in Germany to profit from Brexit, potentially complicating Britain’s attempt to strike a trade deal with the EU.

Al-Wazir, a minister in the state of Hesse, in Germany’s industrial heartland, told Reuters that British politicians were unrealistic in hoping for generous terms for future trade deals.

“It is naive to believe that countries are simply waiting to strike trade deals with Great Britain after Brexit,” he said.

Earlier this year, British Prime Minister Theresa May, when announcing that Britain would quit the European Union’s single market, hinted that it could use tax breaks to fight to attract businesses if the EU imposed punitive tariffs.

Al-Wazir said he expected the clearing of trades in euros, a multi-trillion-euro business, to move from London to centers including Frankfurt, which he is responsible for promoting.

The collapse of merger talks between Deutsche Boerse (DE:DB1Gn) and the London Stock Exchange (L:LSE), however, could complicate this, with some observers predicting that the LSE is now more likely to move clearing to its Paris-based business.

Although Britain is not one of the 19 countries in the euro currency bloc, London dominates trading in the currency.

The trading of euro-based securities spans trillions of euros of derivatives deals as well as the ‘repo’ market providing short-term funding for banks – roughly 2 trillion euros of which experts say is based in London. On top of this, there is foreign exchange trading in the currency itself.

The Frankfurt-based ECB wants oversight of this business for a practical reason: if any disaster were to hit these markets like the 2008 collapse of Lehman Brothers bank in the United States, it would be responsible for dealing with it.

Leave a Reply

Your email address will not be published. Required fields are marked *