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    Tory council leader blasted after calling self-isolation payments an ‘incentive’ to catch Covid

    A Tory council leader has sparked outrage after suggesting self-isolation payments were an “incentive” for people to catch coronavirus.John Fuller, who leads South Norfolk Council and is a friend of Boris Johnson, told Newsnight that the cash could encourage people to contract Covid-19. The deadly illness has killed 130,000 across the UK since February last year.The comments came as the BBC show investigated whether access to the payments – made to people who otherwise could not afford to take time off work – needed to be increased to reduce transmission of the virus.“Let’s flip it the other way around,” said Mr Fuller, an OBE. “Let’s not have a system whereby if you catch Covid you get £500. That’s an incentive to actually spread the disease and that’s not in anybody’s interest.”Apparently stunned by the suggestion, host Kirsty Wark intervened for clarification. “Are you really saying that?” she asked.Read more:“What I’m saying is that let’s not have the incentive,” he replied. “I didn’t say it was. Let’s not have an incentive that would encourage people to catch the disease.”He went on to argue that local councils were more effective at running test and trace operations than NHS Test and Trace – the government’s £37bn behemoth, which critics describe as failing.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayBut his comments about the self-isolation payments were immediately criticised by the Thursday night show’s other guest, Labour mayor of the Liverpool City Region Steve Rotheram, who pointed out that 70 per cent of people who apply for the support are rejected.“Nearly 130k people have died of Covid in the last year alone because of his party’s handling of the pandemic,” he later added on Twitter. “What an insult.”Others were even blunter. “Tories think its all about money because that is all they care about,” wrote one person on Twitter.It is not the first time Mr Fuller has caused controversy. In November last year the 53-year-old was reported to the RSCPA after it emerged he had posted photos on social media of apparent attempts to set fire to moles in retaliation for the creatures digging up his back garden.In Facebook images, Mr Fuller, 52, could be seen with a propane can in a wheelbarrow, firing flames into burrows. “A great day to be killing moles,” he wrote. More

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    UK politics news – live: Legal fight launched over care home rules as polls say it’s ‘all over’ for Alba Party

    Alex Salmond claims Sturgeon will ‘work’ with Alba PartyThe government is facing a legal fight from campaigners over its guidance banning people in residential care over the age of 65 from taking trips outside their homes. John’s Campaign, an initiative advocating for relatives to have better access to their loved ones in residential care, has accused the government of acting unlawfully by imposing a “discriminatory” blanket ban. The advocacy group has said the Equality Act 2010 blocks the kind of “discriminatory approach” it said the government is taking on home care rules.The campaign is also fighting to see rules requiring anyone who leaves a care home to self-isolate for 14 days overturned. Meanwhile, Alex Salmond’s pro-independence Alba Party could be “over” before it has even begun, with new polling suggesting the party is on course to claim zero seats in next month’s Holyrood election.A Survation survey marking the first test of support for the new party found that only 3 per cent of Scottish voters would back Alba on the ballot.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayShow latest update

    1617360589Good morning and welcome to The Independent’s live blog tracking the latest in UK politics as the government faces a legal challenge to its care home rules. Chantal Da Silva2 April 2021 11:491617361378Government faces legal battle over home care rules The government is facing a legal battle from campaigners over its guidance blocking residential care residents over the age of 65 from taking trips outside their homes. John’s Campaign, which advocates for relatives to have better access to their loved ones in residential care, has accused the government of acting unlawfully by imposing a “discriminatory” blanket ban.The advocacy group has said that the Equality Act 2010 is meant to protect against the “discriminatory approach” it said the government is taking with home care rules enforced in response to the coronavirus pandemic.John’s Campaign is also fighting to see rules requiring anyone who leaves a care home to self-isolate for 14 days overturned.Currently, the government’s guidance, which was updated on 8 March, states that trips to see family or friends should only be considered by those who are under 65.Chantal Da Silva2 April 2021 12:021617361702Polling suggests it is ‘all over’ for Alex Salmond’s Alba Party New polling suggests it is “all over” for Alex Salmond’s pro-independence Alba Party, with one survey putting his party on course to take zero seats in next month’s Holyrood election. The Survation survey, which is the first to weigh support for the Alba Party, found that only 3 per cent of Scottish voters would support the new party. Adam Forrest reports: Chantal Da Silva2 April 2021 12:081617363020Most pubs in England may not reopen under April plans, trade body warns Only around 40 per cent of pubs are likely to have the outdoor space and capabilities to reopen as coronavirus restrictions ease in April, a hospitality industry leader has warned. Speaking on BBC Breakfast, Emma McClarkin, the chief executive of the British Beer & Pub Association (BBPA), said the outdoor dining requirement will present a “huge restriction on capacity”. She further warned that pubs that do open under the restrictions will likely be “loss making”, with a ban on indoor payments further complicating “how we will serve people in venues”. The hospitality chief also warned that the potential introduction of vaccine passports could complicate things for the hospitality industry, creating further hurdles for bars and restaurants.Chantal Da Silva2 April 2021 12:301617363273More than 70 MPs join cross-party call urging against vaccine passports More than 70 MPs have joined a cross-party call urging against the introduction of vaccine passports to help open up England’s economy.Politicians including Liberal Democrat leader Ed Davey and Tory 1922 committee chair Graham Brady have said they believe the use of such certificates would be “divisive and discriminatory”. Policy correspondent Jon Stone explains: Chantal Da Silva2 April 2021 12:341617364561Windrush campaigners disturbed by omissions in race report Campaigners advocating for those affected by the Windrush scandal have expressed alarm over the fact that the issue came up just twice in a controversial government-commissioned report on racial disparities in the UK.The report, which concluded that the UK is no longer a country where “the system is deliberately rigged against ethnic minorities” sparked widespread backlash, with many accusing the Commission on Race and Ethnic Disparities, which authored the report, of downplaying the impacts of slavery and seeking to shut down calls to address structural racism. Speaking to The Guardian, Patrick Vernon, a high profile campaigner in the Windrush scandal said he believed that had the report’s authors focused on the scandal in their report, they would have been forced to “admit there was a systematic, structural failure” in how the Home Office “targeted the Windrush generation”. “I can see why they haven’t included it,” he said.Meanwhile, Anthony Brown, who heads the Windrush Defenders Legal group in Manchester and who was personally affected by the Windrush scandal, said he felt frustrated that it appeared the government had not “fundamentally taken on board what the Windrush scandal means”. “A whole cohort of people were marginalised,” he said. Chantal Da Silva2 April 2021 12:561617365399Chantal Da Silva2 April 2021 13:09 More

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    Campaigners launch legal challenge against ban on care home residents taking trips

    Campaigners have launched a legal challenge against a blanket ban on elderly residents making trips away from their care homes, saying the government’s guidance strips people of their basic rights and effectively turns sheltered accomodation into a “prison”.Under the rules, which were updated last month, people in residential care over the age of 65 are prevented from leaving home apart from in exceptional cases.This, campaigners say, prevents residents from enjoying simple activities such as walking in a local park.Those who are permitted to leave the care home, for example to visit a friend or relative at the end of their life, must self-isolate for 14 days on their return.John’s Campaign, which has campaigned for the rights of families and care homes residents throughout the Covid-19 pandemic, has launched a legal challenge against the ban and the quarantine rule.Read more:The group said the imposition of a blanket ban, and the failure to communicate and ensure individualised risk assessments are taken for every resident who wishes to make a visit out, is unlawful.They argue that an individual who is 64 but may suffer from conditions that make them particularly vulnerable to infection could have an individualised risk assessment that would allow them to take a trip out of the home, but an individual aged 66 who may be less vulnerable to infection is not afforded the same right.In a letter sent to the Department for Health and Social Care (DHSC), the group also questions the requirement to self-isolate, arguing that as care homes now have rapid testing, designated visitors are permitted and residents are vaccinated, the requirement is unnecessary.Julia Jones, co-founder of John’s Campaign, said: “I am at a loss to understand how the basic right of a person living in a care home to make their own simple choices over a walk in the park, for instance, has been so comprehensively ignored – and denied – over the past 12 months. “The 440,000 people living in care homes include some who moved in through their own volition, with full mental capacity, never guessing that this simple freedom, enjoyed by everyone else in the population – apart from prisoners – could so easily be denied them.”Nicci Gerrard, also co-founder of the group, called the rules “discriminatory, harmful and wrong”.She said: “Care homes are not prisons, and people living in them should have the same rights as everyone else in society.“What’s more, to make them self-isolate for 14 days if they do leave the care home is to cruelly continue to enforce separation from those they love that has blighted too many lives in the past year.”Tessa Gregory, a partner at law firm Leigh Day, which is supporting the challenge, said: “Care home residents and their families have suffered disproportionately through the pandemic both from the virus itself but also from enforced isolation.“It is vital that as the rules are relaxed for the general population, care homes residents are not left behind. “There is no reason, if appropriate precautions are taken, to prevent residents over working age from having much needed visits out and it also cannot be right that if residents do leave their homes they always have to always isolate for 14 days on their return.”A DHSC spokesperson said: “We know just how crucial visits are in supporting the health and wellbeing of residents. Our current guidance provides a range of opportunities for visitors to meet and spend time with their loved ones in a care home under carefully designed conditions to keep everyone safe.“Residents over 65 can make visits outside of care homes in exceptional circumstances and all decisions in relation to visiting should be made on the basis of a risk assessment centred around the individual. This is made clear in our guidance.“As we move along the roadmap, we are looking to open up more opportunities for visiting both into and outside of care homes – wherever this can be done safely and is supported by data.” More

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    Alba Party: ‘All over’ for Alex Salmond, polling suggests

    Alex Salmond’s pro-independent Alba Party has been hit by shock new polling, which puts his party on course to take zero seats in next month’s Holyrood election.The Survation survey, the first to gauge support for the new party, finds only 3 per cent of Scottish voters will back Alba at the ballot box.Leading polling experts believe Mr Salmond’s party needs at least 5 per cent of the votes to be in range of winning seats under Scotland’s regional list system.“The headline is that it looks as though it’s all over for Salmond,” said polling guru Professor John Curtice – who has warned the former SNP leader could finish up “empty handed” on 6 May.Prof Curtice said it was still possible that Mr Salmond “might just get a seat” in the north-east, where he heads up his party’s regional list. “But this [poll] is not what he needs if he is going to get his campaign to take off.”Read more: Mr Salmond’s team remained defiant, despite the poor poll numbers. “These early indications put Alba within touching distance of representation across Scotland,” said a party spokesperson.The spokesperson added: “With five weeks still to go Alba’s support can only grow as we approach polling day. It is worth noting that Alba has already achieved, in three days, approaching half the level of support of the Liberal Democrats, a party which has existed for over a century.”Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayMr Salmond is writing to regulator Ofcom and TV broadcasters, claiming there is an “unanswerable” case to include his party in election debates alongside the five established parties with seats at Holyrood.Nicola Sturgeon, meanwhile, has said she has “no intentions” of working with Mr Salmond, even if his party does get seats in the Holyrood parliament, after the Alba Party leader suggested she would have to work with others in the cause of Scottish independence.The SNP leader told Channel 4 News that she does not believe the Alba Party would “help the independence cause”, adding: “I’m not even sure from his perspective it’s intended to do that.” More

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    Government’s race report ignores ‘brutal evidence’ of economic inequality, says charity

    A controversial report that concluded institutional racism does not occur in the UK failed to consider the “brutal evidence” of inequality highlighted by Covid-19, an anti-poverty charity has said.Turn2Us said its research painted a different picture to the one described in the Commission on Race and Ethnic Disparities’ report.The government-commissioned independent review into racism asserted that UK is no longer a country where systems are “deliberately rigged against ethnic minorities” and that very few inequalities are due to race.Data compiled by Turn2Us indicates that ethnic minorities have suffered significantly greater economic hardship during the pandemic.One in six people from Black Caribbean descent have had to borrow from friends or family since March 2020, compared to one in 11 (9.3 per cent) of white British people.Read more:People from minority groups were also more likely to have sold their belongings to get by.One in eight people of Indian descent have done so since the pandemic began, compared to one in 13 white British people.About 10 per cent of white British people reported going into their overdraft since March 2020 compared to 17.9 per cent of people of Black African descent.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayOne in six of people of Pakistani descent have had to miss bills since March 2020, compared to one in 14 white British people (7.3 per cent).Thomas Lawson, chief executive at Turn2us, said the data demonstrated deep-rooted inequalities in society. “You are more likely to experience financial hardship if you are black. You are more likely to have lost your job in the coronavirus pandemic if you are Bangladeshi. “You are more likely to experience deep poverty if you are Pakistani. This is not a coincidence, this is clearly a long-term endemic structural and institutional problem.”He added: “We urge the government to not dismiss the reality of institutional racism and instead look at the evidence and produce a strategy to create meaningful change.” More

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    UK urges EU to stay in vaccine export talks: ‘No single country can face this health emergency alone’

    The UK has urged Brussels to stay in talks about vaccine exports after one of the bloc’s top officials said there was “nothing to negotiate” and threatened to block shipments.Thierry Breton, the EU’s internal market commissioner, said there would be no exports of AstraZeneca’s Covid-19 vaccine outside the EU until the company had met its vaccine commitment to them.But UK officials urged the bloc to show “solidarity and cooperation” in its approach amid concern that Brussels and London could be dragged into a vaccine war.Mr Breton’s comments reflect a growing concern across the EU that the bloc is not benefiting from being a vaccine production hub, with much of its output shipped abroad while its member states’ vaccination programmes lag behind the UK.“If [AstraZeneca] does more, we don’t have any issue. But as long as it doesn’t deliver its commitment to us, the doses stay in Europe — except for Covax,” Mr Breton had said. Covax is an international vaccine programme that is aimed at delivering vaccines mainly to poor countries.Read more:The commissioner said the bloc trying to make sure AstraZeneca’s contract with the EU “is delivered — and of course we are here to also help our British friends … But we have nothing to negotiate”, according to a report in the Financial Times.AstraZeneca had signed a contract with the EU in August for the supply of 300 million doses of the Covid-19 vaccine with an option for a further 100 million doses. However, the supply has been slow. The company reportedly ended up slashing its commitment to 30 million against the initial pledge of 120 million to the EU in the first quarter.Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayMr Breton explained that coronavirus vaccine production from a troubled plant in Seneffe, Belgium, and the Halix factory in the Netherlands corresponded to a vaccine commitment made by AstraZeneca to the EU and thus must not be exported.The vaccine shortage has also led to pressure from within the EU as some member countries seek alternative vaccine supplies. For instance, Hungary started administering Russia’s Sputnik V jabs in February 2021 even as the EU has maintained that it does not need the Russian Covid-19 vaccine.The European Commission maintains that “vaccination is progressing steadily in the EU”“By the end of this week, 107 million vaccine doses will have reached EU countries,” the Commission said in a statement posted online on Wednesday.But last week the Commission said it would begin to use export controls on a case by case basis to restrict exports to countries whose vaccine programme was more advanced than the EU, or where there was plentiful domestic supply.A UK government official told The Independent: “We continue to discuss what more we can do to ensure a reciprocally beneficial relationship between the UK and EU on COVID-19. “As the Prime Minister said in previous statements, including one co-signed by other world leaders, no single country can face this health emergency alone, and we need to address this challenge through solidarity and cooperation.”The EU has so far given the go-ahead to vaccines developed by Pfizer-BioNTech, Moderna, AstraZeneca-University of Oxford, and Johnson & Johnson. Until last week, it had delivered 88 million doses to its member countries and over 62 million doses were administered.The UK, meanwhile, has administered over 30.9 million first doses and 4.1 million second doses of the Covid-19 vaccine. More

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    Alex Salmond claims Sturgeon will ‘work’ with Alba Party after she stops being ‘upset’

    Alex Salmond has claimed Nicola Sturgeon has indicated she will work with his pro-Scottish independence Alba Party and others who back a second referendum on a breakaway.Mr Salmond suggested that the reality of creating a bigger majority for independence in the Scottish was beginning to dawn for the SNP leader, after a week of being “upset” over the creation of Alba.Repeatedly pressed on whether she would rule it out working with Mr Salmond’s party to help deliver indyref2, Ms Sturgeon told ITV on Wednesday: “It’s not for me to say what MSPs elected from other parties vote for in a Scottish parliament.”Speaking on BBC Radio 4’s Today programme on Thursday, Mr Salmond said: “I think that actually after, admittedly, after a week of being quite upset, I think that it was probably indicated by Nicola Sturgeon in her ITV interview yesterday, where she did concede that you have to work with people in the Scottish parliament.”He added: “Frankly, the cause of independence is much, much bigger than personalities. It’s a noble cause, it’s a huge cause for Scotland, and everybody now has to put aside differences and work in that national difference.”Asked how the two parties could work together, given all the recent acrimony between the two leaders, Mr Salmond said: “You won’t find a word of negativity of coming off the lips of any Alba Party candidate.”Reminded that one of his candidates, Dr Jim Walker, had called Sturgeon a “cow” on Twitter this week, Mr Salmond said: “And [he has] has apologised for it. If I may say, it was a Twitter debate before he became a candidate.”Inside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayInside Politics newsletterThe latest news on Brexit, politics and beyond direct to your inbox every weekdayMs Sturgeon has challenged Mr Salmond – cleared of 13 sexual assault charges last year – to apologise to the women “that he behaved inappropriately towards”.Asked if he had reflected on his behaviour towards women, the Alba leader said: “The case we forward at a trial, which is now a year ago, was that the claims against me were part fabrication, part exaggeration.“The most significant is not what I said or what I reflected on, the most significant thing is the verdict of the jury. My behaviour has been tested as probably no behaviour has been tested before, in a trial of my peers … And most fair-minded people think that’s fair enough.”Mr Salmond has persuaded two sitting SNP MPs and four councillors from Ms Sturgeon’s part to jump ship and join Alba. On Thursday, the former SNP MP Tasmina Ahmed-Sheikh – who lost her seat in 2017 – was unveiled as an Alba candidate for the central Scotland region.Ms Sturgeon has denied her party is beset by divisions, claiming the SNP was Scotland’s most “united” force and support was “has never been higher”.Speaking on Good Morning Scotland on Thursday, she said: “I think if you look at the breakdown of opinion polls, that tests the views and attitudes of SNP voters, then you will find that, actually, the SNP is the most united of all the parties in Scotland.” More

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    A New European Financial Landscape Is Emerging

    The United Kingdom’s exit from the European single market on January 1 has sent trade in goods plummeting amid much confusion. By contrast, Brexit was carried out in an orderly manner in the financial sector, despite significant movement of trading in shares and derivatives away from the City of London.

    The Brexit Deal Presents Opportunities for a New Partnership

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    After five years of radical uncertainty, it has become clear that the European Union and the United Kingdom will be taking separate paths on financial regulations — a financial “decoupling” that means a significant loss of business for the City. Whether the EU financial sector can gain much of what London loses will depend on the EU’s willingness to embrace further financial market integration.

    Smart Sequencing Ensured an Orderly Brexit

    As with the Y2K problem, the Brexit transition could have gone worse. It took more than luck to avoid financial instability along the way.

    First, financial firms on both sides of the English Channel (and of the Irish Sea) worked hard and were able to preempt most of the operational challenges.

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    Second, despite all the recurring high-stakes drama between the UK government and the European Commission, the technical cooperation between the authorities actually in charge of financial stability, primarily the Bank of England and the European Central Bank (ECB), appears to have run smoothly.

    Third, the negotiators phased the process in a smart way. The Brexit Withdrawal Agreement of January 2020 helped reduce uncertainty by ensuring that the UK government would meet its financial obligations to the EU, avoiding what would have been akin to selective default. That agreement kept the United Kingdom in the single market during the transition period beyond the country’s formal exit from the European Union on January 31, 2020. It also set a late-June deadline for the British government to extend the transition period beyond December 31, 2020. As London decided not to do so, that left six months of effective preparation.

    To be sure, whether an EU-UK Trade and Cooperation Agreement (TCA) would be concluded remained unknown until late December. But that mattered comparatively little for financial services, since trade agreements typically do not cover them much. By one count, the 1,259-page TCA (which is still unratified by the European Union) contains only six pages relevant for the financial sector.

    The resulting legal environment for financial services between the European Union and the United Kingdom is unlikely to change much any time soon. Contrary to occasional portrayals in the United Kingdom, no bilateral negotiations on financial services are going on, except for a memorandum of understanding expected this month that is not expected to bind the parties on substance.

    From the EU perspective, the United Kingdom is now a “third country,” in other words an offshore financial center, following decades of onshore status. UK-registered financial firms have lost the right, or “passport,” to offer their services seamlessly anywhere in the EU single market. From a regulatory standpoint, they have no better access to that market than their peers in other third nations such as Japan, Singapore or the United States.

    Equivalence Status for UK Financial Market Segments

    Some segments of the financial sector in these other third countries actually have better single market access than British ones, because they are covered by a category in EU law allowing direct service provision by firms under a regulatory framework deemed “equivalent” to that in the European Union. The equivalence decision is at the European Commission’s discretion, even though it is based on a technical assessment. As a privilege and not a right, equivalence can be revoked on short notice.

    So far, the European Commission has not granted the UK any such segment-specific equivalence, except in a time-limited manner for securities depositories until mid-2021 and clearing services until mid-2022. For the moment, the commission appears to be leaning against making the latter permanent. In most other market segments, the commission will not likely grant equivalence to the United Kingdom in the foreseeable future. This may appear inconsistent with the fact that almost all current UK regulations stem from the existing EU body of law. But the UK authorities (including the Bank of England) have declined to commit to keeping that alignment intact.

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    The commission’s inclination to reduce EU dependence on the City of London is understandable. No comparable dependence on an offshore financial center has existed anywhere in recent financial history. Such dependence entails financial stability risk. In a crisis, UK authorities would not necessarily respond in a way that preserves vital EU interests. Think of the Icelandic crisis of 2008, when Reykjavik protected the failing banks’ domestic depositors but not foreign ones. It is hardly absurd for the European Union to try to reduce such a risk, even if — as appears to happen with derivatives — some of the activity migrates from the United Kingdom to the United States or other third countries as a consequence, and not to the European Union.

    At the same time, the argument that keeping EU liquidity pooled in London is more efficient than any alternative is unpersuasive given the European Union’s own vast size. In addition, the European Commission also follows mercantilist impulses to lure activity away from London, even though these generally do not make economic sense. Added up, these factors provide little incentive for the commission to grant equivalence status to more UK financial market segments, unless some other high-level political motives come into play. None are apparent right now.

    The UK Is Unlikely to Regain Lost Advantage

    How the European Union and the United Kingdom will decouple will not be uniform across all parts of the financial system. Regulatory competition between them may become a “race to the bottom” or “to the top,” depending on market segments and the circumstances of the moment, without a uniform pattern. In any case, such labels are more a matter of judgment in financial regulation than in, say, tax competition.

    In some areas, the European Union will be laxer, while in others, it will be the United Kingdom, as is presently the case between the EU and the US. For example, the European Union is more demanding than the United States on curbing bankers’ compensation but easier when it comes to enforcing securities laws or setting capital requirements for banks. At least some forthcoming UK financial regulatory decisions may be aimed at keeping or attracting financial institutions in London, but they are still not likely to offset the loss of passport to the EU single market.

    All these permutations suggest that the medium-term outlook for the City of London is unpromising, although the COVID-19 situation makes all quantitative observations more difficult to interpret. Once an onshore financial center for the entire EU single market, and a competitive offshore center for the rest of the world, the City has been reduced to an onshore center for the United Kingdom only and has become offshore for the European Union. That implies a different, in all likelihood less powerful, set of synergies across the City of London’s financial activities.

    The few relevant quantitative data points available reinforce this bleak view. Job offerings in British finance, as tracked by consultancy Morgan McKinley, have declined alarmingly since the 2016 Brexit referendum. The ECB (as bank supervisor) and national securities regulators coordinated by the European Securities and Markets Authority are tightening requirements for key personnel to reside mainly on EU territory rather than in the United Kingdom.

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    As noted by Financial Times columnist Simon Kuper, many financial firms’ Brexit policy until this year had been to “sit tight and do nothing until post-Brexit arrangements for finance forced [their] hand.” That phase has ended. Firms that drag their feet face regulatory disruption, as happened to broker TP ICAP in late January. Tussles between regulators and regulated entities, rather than between the European Commission and the UK government, are where most of the financial-sector Brexit action is likely to be in 2021. These disputes typically happen behind closed doors, and the regulators typically hold most of the cards.

    For all the optimistic talk in London of “Big Bang 2.0 or whatever,” the United Kingdom’s comparative advantage as the best location for financial business in the European time zone is unlikely to recover to its pre-Brexit level. The macroeconomic losses could be moderated or offset by cheaper currency and less expensive real estate in London, making the city a more attractive place to do nonfinancial business. Even so, a gap will likely remain for the UK government, which has for years depended heavily on financial sector–related tax revenue.

    The European Union stands to gain financial activity as a consequence of Brexit. How much and where is not clear yet. As some analysts had predicted, Amsterdam, Dublin, Frankfurt, Luxembourg and Paris are the leaders for the relocation of international (non-EU) firms. Dublin and Luxembourg specialize in asset management, Frankfurt in investment banking and Amsterdam in trading. But EU success in terms of financial services competitiveness and stability will depend on further market integration, the pace of which remains hard to predict.

    The European banking union is still only half-built because it lacks a consistent framework for bank crisis management and deposit insurance. The grand EU rhetoric on “capital markets union” has yielded little actual reform since its start in 2014. Events like the still-unfolding Wirecard saga may force additional steps toward market integration, even though a proactive approach would be preferable.

    The one near certainty is that London’s position in the European financial sector will be less than it used to be.

    *[This article was originally published by Bruegel and the Peterson Institute.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More