Speaking to the Süddeutsche Zeitung, Joachim Wuermeling said that Britain could “gain third country status in its relations to the EU, like Tunisia for example, when separation talks are over.”
Wuermeling, who in November was appointed to the board of the Bundesbank (Federal Bank), was referring to financial relations between the UK and the rest of the EU.
He warned that exchanges between the British and continental financial markets would become much more complicated after Brexit if transitional regulations are not agreed on within the two-year negotiating period.
As soon as supranational licensing for financial products disappears, the sale of these products across the English Channel “either won’t happen at all anymore, will be restricted, or will cost more money,” he said.
“German and EU financial institutes should expect this to happen, they need to be prepared.”
On Wednesday British Prime Minister Theresa May is set to make a request to the European Council under Article 50 of the Lisbon Treaty, thus starting a two-year negotiating period on the UK’s exit from the EU.
While Britain has said it expects to negotiate the terms of its new relationship with the EU during that time, the European Commission has made no such guarantees, insisting that the period exists for negotiating the terms of departure.
Wuermeling noted that this would mean that Britain would be in the same place as countries like Tunisia rather than other industrial powers such as Japan and the USA, which have developed financial equivalence agreements with the EU.
“Financial equivalence agreements have been developed over decades with other financial centres. According to the EU Commission there are currently 212 such agreements with 32 different countries," he said.
“With Japan alone there are 17 such agreements, with the USA there are 16. London of course hasn’t negotiated a single equivalence agreement.”