Sources told GlobalCapital on Monday that there is exasperation over the UK's lack of strategy in the Brexit negotiations and the City risks losing out in the chaos surrounding the political fight over Brexit.
The industry has already taken some steps to lay out its position on future trade.
A report from UK Finance — Supporting Europe’s Economies and Citizens: a modern approach to financial services in an EU-UK Trade Agreement — lays out a model for the mutual recognition of financial services in the UK and EU and has won support among many industry firms who have dedicated their resources to helping solve the seemingly impossible Brexit conundrum facing politicians.
The EU hasn’t been overly receptive so far to the idea of a comprehensive free trade agreement which includes financial services, but the differences in its approach to negotiations with Canada and to its proposals for TTIP, show that EU red lines might be more flexible than is being suggested by Messrs Barnier and Juncker.
Pragmatists across the continent, even those in Frankfurt and Paris, will begrudgingly recognise that London is likely to remain the most important financial centre on the continent for the foreseeable future. A complete break with the City would be almost as harmful to Europe as it would be to London.
If the City can draw up a framework for continuing operations that is broadly welcomed across Europe then the UK government would likely have to adopt it out of necessity.
London-based financial firms also have the in-house expertise to deal with many of the regulatory and technical issues which would arise in the creation of such a framework, given their experience of negotiating with the EU on its stream of post-crisis regulatory dictums.
Along with having the expertise, and the will, to act independently of the UK government, both the City and the EU need to move forward on laying the framework for post-Brexit operations out of necessity.
Time is running out and a cliff edge Brexit in March 2019 is an outcome all stakeholders, outside of the most extreme wings of the British political right, want to avoid.
Even if it involves some contribution to the EU budget, as MEP Paul Tang suggested to GlobalCapital on Monday, firms should work to band together in the coming weeks and months and find a detailed and comprehensive solution to negotiate with the EU.
The City shouldn’t have to fight its own corner in the Brexit battles ahead, but if the UK government lacks any leadership or ideas, it will have to take matters into its own hands.