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Home » Daily Briefing » Daily briefing - 12 December 2018

Daily briefing - 12 December 2018

Theresa May's premiership is teetering on the brink today, even as Europe's financial institutions put the final touches in place in expectation of a hard Brexit. The European financial sector, apparently aware that everything is now entering the terminal stage, is now sharing drafts with the FT suggesting that the EU will offer the UK access to Euro clearing in exchange for information sharing. "The European Commission is in advanced plans with its draft of rules that will give banks and brokers in the European Union access to vital market plumbing based in the UK," the FT reports. "The drafts envisage that equivalence will be limited, but do not specify a time period." The FT continued: "The legal certainty would ease growing concerns over access to the UK's infrastructure. London dominates the European market for swaps and futures clearing, handling the bulk of the €660tn market. Around £45tn of swaps positions held by EU banks are at risk from a no-deal Brexit, according to the Bank of England. Without approval, EU banks and brokers cannot use UK venues to trade derivatives and face a hefty rise in trading costs -- or an inability to hedge their market exposures."

While Britain is not for turning, historically speaking, European papers are reporting in breathless amazement at Theresa May's day-long tour of European capitals yesterday in search of someone/anyone who might agree to re-open the Brexit negotiations, the political equivalent of going back to the supermarket with a week-old loaf of stale bread and no receipt and asking for a fresh loaf. According to the Guardian, Mrs May received polite rebuffs from leaders including Angela Merkel, with many media outlets offering up the short video of Theresa May struggling to get out of her limousine in Berlin while the German chancellor stood a few metres away, looking on anxiously. Commentators offered the unkind but not inaccurate observation that Mrs May's team can barely get her out of her car, never mind effecting a seamless escape from the EU. The Guardian added this note: "During the referendum campaign in 2016. Michael Gove, the environment secretary who was then a leader of the Vote Leave campaign, warned that if the UK stayed in the EU, we would be like 'hostages locked in the back of the car.'"

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