UK-EU Relationship in Financial Services (European Affairs Committee Report)

Lord Desai Excerpts

Wednesday 17th May 2023 Grand Committee

[Lord Desai (Non-Afl)]

My Lords, I used to belong to a committee which dealt with these financial matters before we Brexited. It was always obvious that, if we did Brexit, we would have some loss of business to Frankfurt and other centres in Europe; after all, that was the whole scene. We somehow convinced ourselves that by breaking free of Europe, the entire rest of the world was suddenly going to congratulate us and come to do business with us, and all sorts of things. The surprising thing is that we are still not finished with the Brexit business.

Seven years later, we are still debating the protocol and all sorts of other legislative things are going on—about cutting European legislation from us, and so on. So it does not look like we are free of Brexit yet, but we have suffered all the disadvantages of it. We are neither free of the EU nor friendly with it, so we are paying a big cost. This is not relevant to our debate, but on the television today two big car factories have been complaining about the fact that they are losing out from Brexit and they are going to have to stop operating in the UK.

One of the surprising things is the slowness with which the party in power has dealt with its great dream. It dreamed about Brexit and said, “Get Brexit done”. Okay, you got Brexit done—but you have not got Brexit done because it is still a problem in the economy. This very nice report valiantly tries to deal with all the problems which are going on. But ultimately, the fact remains that we have not explained to ourselves that the City is losing out. It may still be very big and very profitable, but it is no longer as big as it used to be and it is losing out as much to the US as to the smaller centres in the EU.

The problem we really have to face is how quickly and how soon we can get over this barrier. Having decided to Brexit, let us Brexit, but let us have speedy and neat arrangements whereby we can organise our own affairs. The impression that I get from this report is that, somehow, there is a failure on the part of the Government—I am sorry to say this—to get their act together and decide what it was that they wanted to do, what they expected and how they decided that it was not going to happen because what they expected was far too optimistic and they had not actually calculated the problems of the real world.

One very useful thing that this report says is that there are more financial centres in this country that just the City of London. We must be absolutely careful that these centres thrive. We must do things so that they thrive and do not suffer any disadvantages as against London.

I do not want to go on for very long because people have said what it is worth saying. However, I feel that, at some stage, we ought to know—perhaps from the Minister—how soon we can expect to wrap up all the adjustments and restrictions and get on to a real, normal, post-Brexit UK economy. We are still swimming around in the muddy waters and, until we get out of those muddy waters, we will not know whether we have gained or lost. So far, I think that we are losing but, if we are to gain from Brexit, we had better get Brexit done—and quickly.