EU Commissioner, Mairead McGuinness, is the new head of financial services in Brussels. She”s been handed a difficult portfolio due to the worrying economic downturn caused by the pandemic and Brexit. Euronews correspondent, Meabh McMahon, spoke to the commissioner to find out more on where Brexit negotiations stand as a deal has still not been agreed and the deadline is looming. She also asked McGuinness the tough question about Europe’s COVID-19 recovery plan and how to repay it. Finally, they discussed where Europe stands on the banking union.
To watch the full interview, click on the player above.
Michel Barnier has described Brexit talks as extremely difficult. Would you say at this late stage that even a minimalist trade deal is better than a total collapse?
EU Commissioner for Financial Services, Mairead McGuinness:
Well, I think that’s absolutely true. We are trying to get a good trade deal between the European Union and the United Kingdom. From a European perspective, what we are trying to do is protect the single market for the 27 member states. This was built up over decades with the United Kingdom, who are very supportive of us, and also the UK has particular lines that they will not cross. But ultimately, as I’ve said many times if you can pull back from the rhetoric and the emotion and look at the logic, it makes perfect sense that we can negotiate a trade agreement.
Whatever happens with Brexit, we have seen trust at a historic low level between the EU and the UK. Can you see that being healed next year?
Well, I’ve always said that trust is the core of any relationship and any set of negotiations. The issues around the withdrawal agreement have now been resolved and we hope everything will be in place by the 1st of January.
But of course, trust is lost suddenly and rebuilt slowly. And I think that perhaps that is why the negotiations have been especially difficult, not just because Covid has interrupted everything, but because there is this worry on the EU side that trust was broken. Now we are all trying to restore trust. And I think we need to work very hard on that, because the only way you can reach any agreement with the United Kingdom is that we both trust each other and we trust our word and our deed and our signature. And because that was tested by the UK’s decision, there’s a little bit more hesitancy on our side to just be very trusting again.
The 4th of January, 2021 will be the first day of trading in this new relationship after a year of COVID-19 market turbulence. Neither side wants to see more financial disruptions. Can you tell us how the financial services sector will look on the 4th of January in the case of a deal and of course, in the case of a no-deal?
Those are two very, very big questions, what I can tell you is that my role here, is to ensure financial stability. So we as the European Union have taken a very minimum number of equivalence decisions in order not to, if you like, financial stability to be rocked by the end of the transition period. It’s also true to say that the city of London is a very major financial centre that would not change overnight.
But I think there will be questions within the European Union around open strategic autonomy, around having a reliance on a very large financial centre in a third country. While there will not be any immediate decisions or change, I think in the medium to long term, this will evolve. So there aren’t any sudden decisions. It would be interesting to see how the negotiations evolve around having an absolute deal. I think if there is a trade agreement reached, it makes the politics and the relationships much easier as we look at more complicated issues because as you know, the financial services sector is not covered by the trade agreement. But it does go back to this core and fundamental question of where Europe wants to have its centre of financial activity. There are possibilities. We may not need a single financial centre that we rely on. It certainly will not in the long term, continue to be the city of London. But what about other centres within the European Union itself? These are discussions and conversations that are happening. So there’s no clarity as to how the future will look, but there is some certainty that it will not look the same as it does today and for very good reasons because the United Kingdom has voted to leave the European Union.
The COVID-19 pandemic has caused economic chaos here in the EU. Can you guarantee that the recovery package will help those who need it the most and that it won’t further social inequality in Europe?
Well, I think it’s a very important question. We cannot allow, if you like, the disadvantaged to be more disadvantaged because of COVID. There are other sectors and I think in particular on the service sector and tourism, where the impact has been devastating across member states. We really do need to inject life and hope into that sector. We also need to make sure that our financial system is fit for purpose and that those who are under pressure now have early conversations with their banks so that they can restructure where that is the case. What I would hate to see is some enterprises and sectors being hit in the short term, being unable to meet their commitments, but that perhaps if we had restructured for the medium term, they would survive.
The other factor, and this is a more disturbing reality, is that some sectors will not recover. Here I am wondering what will happen to retailers and small towns and villages across the European Union because of the avalanche of buying online, which has saved many in some ways who have adapted to the digital era. But in the longer term, will have accelerated a trend towards more digital transactions. And even in the financial sector, we’ve seen an avalanche of change in financial transactions. So none of us quite understand the landscape that we will be facing in a year’s time. But we are preparing by asking the member states to make their plans for how they can invest for a green and more digital and more sustainable economy and society.
The millions and billions of euros in the recovery package will have to be paid back. Can we find new resources to pay them back? MEP’s have been pushing for a tax on financial transactions. Will you be taking this seriously?
Well, I think we have to find resources to pay back the money because every loan has to be repaid. At the moment, we have no, if you like, certainty around how many financial instruments we will need to do that. There are a lot of suggestions around a plastic tax, a carbon border adjustment tax, all of these other possibilities.
One of your tasks is to complete the banking union. What is the realistic timeframe to complete for that?
Well, this has been on the agenda of the Commission and the member states for a long time now. I think there’s a renewed impetus to say we need a banking union. I would hope that in my mandate, which is four years more, that we will be able to complete some of the more contentious issues around the banking union, like a European deposit insurance scheme, which is really important in terms of the longer term, trying to rebuild trust, as we’ve talked about in another framework between member states, because of the last economic crisis, there was actually a question of a lack of trust between member states. We have to rebuild that. One way we can do that is the realisation that strong, weak, small or big economies have all been impacted by COVID. The pandemic wasn’t very selective. You know, it picked on older, younger, richer, poorer. It didn’t discriminate. Therefore, I think it should unite us better towards achieving a banking union or at least making the significant steps forward to allow it to become a reality so that we can bank across borders. We can do it securely and safely in the knowledge that we have all of the, if you like, the framework in place to allow that to happen.