There was little sentimentality on show recently for the old sod from Irish-born, but British-educated, lord mayor of the City of London Nicholas Lyons who is effectively the elected top lobbyist for Britain’s international financial sector.
Lyons, who was born in Dublin but moved to England at the age of five, was in Ireland last month where he was publicly effusive about his desire for greater post-Brexit co-operation. Privately, he has been more muscular, however. He dropped a not-so-subtle hint about it last week in a meeting with international journalists.
The City and the British government want to strike an “equivalence” agreement with the European Union for each side to fully recognise the other’s regulations. It would help smooth certain difficulties faced by British financial firms since the UK voted to leave the EU.
An agreement has not been forthcoming so far. Lyons last week appeared effectively to threaten that if an agreement could not be reached, the British side has ways of damaging Ireland’s financial services sector to focus minds. Government officials say they have heard similar suggestions from the British side in private.
Silicon Valley Bank: what is the cost of the collapse?
What leverage does Lyons think Britain has? He says Dublin’s burgeoning fund administration sector is dependent upon the business it picks up from London’s huge asset management industry. If the EU doesn’t play ball with Britain on equivalence, he suggested, rule tweaks in London could damage the flow of business to Dublin.
“[We have] great and deep relationships with Ireland [and we] absolutely want that to remain the case,” said Lyons.
Then came the “but”.
“The funds business in Dublin could be curtailed with some relatively small regulatory changes. There is definitely a desire in the [UK] government to help the City be as competitive as it can. We want to do that in a sensible and thoughtful way that enables us to rebuild relationships with the EU. But there is always another way to do things. We have not really flexed our muscles [yet] on regulatory change.”
Privately, Irish officials believe the City does not have the kind of leverage over Dublin that it thinks it has. Either way, there may be some muscular talks ahead.
