Goldman adviser with European ties has warning for City of London

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(Bloomberg) – The European Union is unlikely to grant an equivalency to the UK on financial services, with a divergence between the two ‘most likely scenario’ in the coming years, Goldman Sachs said Councilor Jose Manuel Barroso.

“I personally believe there will be no permanent equivalency decision on the European Union side when it comes to financial services,” Barroso said Thursday during a Moody’s investor services webinar . “It is more or less inevitable, irreversible, a tendency of gradual divergence,” he said.

Comments from Barroso, who led the European Commission for a decade until 2014, underline the hard line the EU has taken on the issue so far. Europe and the UK have yet to negotiate a funding deal that would allow something like the pre-Brexit status quo. Talks slated to end in March revolve around a way forward for cooperation, and have mostly symbolic significance, while a decision on equivalency is unlikely to come anytime soon.

“It is clear” that the EU wants more businesses to move from London to the eurozone following Brexit, Barroso added. The bloc wants the “dislocation” of certain capital, people and “risk management from the UK to the euro area and to the EU in general,” he said.

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© Bloomberg. A pedestrian holds an umbrella, featuring the design of the European Union (EU) flag, as he takes shelter from the rain in the City of London financial district in London, UK on Monday 19 August 2019. The European Central Bank lambasted the banks. for slowing down their Brexit preparations, telling them to transfer additional staff and resources to the European Union in the event Britain leaves without a deal on October 31.

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