Brexit could lead to ‘complete breakdown’ between UK and EU

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In an interview with Business Insider, David Wright, the former deputy director general for financial policy at the commission, said that the strident tone ahead of Britain’s divorce negotiations with the EU, and the “red lines” likely to dominate once Article 50 is triggered, could make an agreement between both parties impossible, reports The Independent.

“Brexit was a dagger in my heart,” Mr Wright, who spent more than 30 years working at the EU commission, told Business Insider.

“It’s not a bit neutral, or a bit negative, but for the EU and the UK it’s potentially extremely disruptive. There’s a risk of a complete breakdown, certainly it’s looking more probable,” he added.

The Government said that it plans to trigger Article 50, the EU’s formal exit clause, by the end of next month. The House of Lords began debating the bill giving Prime Minister Theresa May the authority to take that step earlier this week.

“There’s so much complexity. To resolve all of it in two years is absolutely impossible. Politics in the EU are not black and white like in the UK,” Mr Wright said.

Hedge fund managers and financial services firm in the UK found themselves in an increasingly precarious position following Britain’s decision to leave the EU. Ms May’s hard Brexit will almost certainly result in the loss of crucial passporting rights, which allow financial firms to sell their services freely across the rest of the EU.

Mr Wright urged the UK government to provide more clarity on the future of financial services.

“The US isn’t going to change its financial services laws for the UK, so the danger is [that] the UK is pulled towards US rulemaking approaches and away from EU parallelism,” Mr Wright said.

“Some of the bills on the table could castrate the US regulators,” he said.

Ms May has sought to rid the UK of the obligation to offer free movement for EU citizens, by saying that Britain will leave the single market and instead negotiate access for some UK industrial sectors as part of a free trade agreement.

Economists remain gloomy about the prospects for Brexit, despite the robust performance of the British economy since last June.

The Office for Budget Responsibility in November forecast a sharp slowdown in UK growth to 1.4 per cent in 2017.

It will update its forecasts alongside the Budget on 8 March.

 

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