Brussels’ plot to raid City clearing dealt a blow Business

In a speech in Frankfurt on Wednesday, she said the EU’s dependence on the City of London is a vulnerability similar to its dependence on Russian oil and gas.

Ms McGuinness said: “We need to be careful about where we are vulnerable to decisions made outside the EU, and therefore outside our control.

“Energy is the biggest and most urgent example of this vulnerability right now. But we also need to watch for vulnerabilities in capital and financial services.”

Clearing has become a key Brexit battleground as Brussels seeks to build “strategic autonomy” to boost its own capital markets.

The London Stock Exchange’s clearing unit handles around 90% of interest rate derivatives in euros, a contract widely used by firms in the bloc.

However, the EBF’s criticism will deal a severe blow to Ms McGuinness’ proposals, as the trade body represents 32 national banking associations across the continent and more than 3,500 European banks.

In its brief, the federation said that indiscriminate relocation of clearing business would be “inefficient and counter-productive”, adding that it “would deter non-EU market participants from moving a significant part of their market activity to the EU”.

The EBF’s submission concluded: “We ask the European Commission to only consider measures which make clearing in the EU more attractive, without disproportionately harming other market players who are essential to the provision fair and efficient clearing services.”

Last September, Bank of England Governor Andrew Bailey warned that Brussels bureaucrats risked serious damage to the financial system if they continued with their plans to plunder the London market.