(Bloomberg) -- Eurogroup chief Paschal Donohoe expressed optimism about the prospects for a major reset in UK-EU ties, even as Britain’s new prime minister, Keir Starmer, stresses he has no plans to reverse the main choices of Brexit.
“It is extremely possible — and I want this to happen — that there will be a big improvement in, not just the tone, but the nature of the relationship between the UK and the EU,” Donohoe, president of the Eurogroup, an informal body of ministers of eurozone states, told Bloomberg in an interview last week. Donohoe added that he was going to London in September to play his part in improving ties with Labour in the wake of Starmer’s landslide election victory last month.
Donohoe, who also serves as Ireland’s minister for public expenditure, separately told Bloomberg Radio that the prospect of a second Donald Trump presidency provided a fresh impetus for the European Union to make its economy less dependent on the US.
The UK election on July 4 returned Labour to power after more than a decade on the opposition benches, including the Brexit vote in 2016 and the country’s subsequent exit from the EU’s common market. Although Starmer once opposed leaving the bloc, he has repeatedly sought to reassure those who supported leaving that he’s focused on improving the relationship rather than relitigating Brexit.
Starmer hasn’t singled out any special measures for the financial services sector, which employs some 2.5 million directly and in related professional services, according to the Treasury and the City of London Corporation latest annual report on the industry.
Something hasn’t materialized since Brexit is an “equivalence” deal that would allow for reciprocal access between London and the EU. London-based firms have since moved thousands of staff to offices across Europe, with Anglophone Dublin as most popular destination for staff re-locations and offices, according to EY.
In his comments on the UK, Donohoe played down the chances of big policy changes. The most likely development was a “number of medium-term projects between the UK and the EU that would lead to a huge improvement in the tone of the relationship,” he said during the interview on Aug. 7.
“The City of London has continued to demonstrate great resilience in its ability to withstand the Brexit shock better than expected,” Donohoe said.
Fresh polling released by YouGov on Tuesday showed that 59% of Britons would support rejoining the EU if another referendum were held, compared with 41% who would oppose it. Still, 51% believe that Starmer lacks a mandate to hold such a vote, according to the survey of 2,032 adults conducted on July 23-24.
Donohoe said he was “reasonably optimistic” of progress on securitization as a result of the ongoing review. Securitization is one plank of the EU’s Capital Markets Union, a decade-old plan to make it easier for companies to raise funding and for investors to put their money to work safely and cheaply across the EU’s borders.
“It’s one of the areas where there is more consensus on,” he said, adding that there was definitely a higher level of support for that than for the European Deposit Insurance Guarantee.
--With assistance from Tuhin Kar.
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