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The Brexit negotiations are still some way off from discussing future market access but the City of London is already spooked. If there is no formal deal is brokered between the UK and the EU, goods will be covered by World Trade Organisation terms. It might be painful but at least trading will continue. Britain’s services industry, which accounts for about 80 per cent of GDP, will be left to fend for itself.

It is the same story for Britain’s financial services sector, which is grappling with the prospect of limited access to EU markets after Brexit day. The conundrum is balancing market access with regulation. The government is unlikely to accept any ongoing arrangement where the UK is a rule taker, not a rulemaker. A standstill transition agreement may see that occur temporarily, but it is not practically or politically sustainable in the longer term.

What is to be done? Howard Davies, chairman of the Royal Bank of Scotland, argues in a crunchy opinion piece that a committee of “wise men” urgently needs to be formed to find a bespoke solution that will go some way to meeting the needs of both parties. New regulatory arrangements need to be put in place, given that all sides recognise that London will remain core to the European capital markets for a long time to come.

Howard says that suspicion of the UK’s intentions is all too evident in European capitals, particularly among central bankers and regulators who meet and talk of eating cake. In London, businesses are watching carefully to see if progress is being made in the run-up to December’s summit and whether the nod will be given to move discussions on from divorce proceedings to future relationship. The City is a unique part of the Brexit puzzle and the government needs to acknowledge this. Prompt and creative thinking should commence soon. Otherwise, serious market disruption will be on the horizon for March 2019.

Xi’s Leninist autocracyMartin Wolf looks at the remarkable rise of China from impoverishment to middle-income status in his column, and how President Xi Jinping is taking inspiration from the Soviet Union. He argues that the west should not look to rejuvenate its politics by copying China’s drift towards autocracy.

Robot friendsSarah O’Connor argues in her column that we should not be afraid of robots and there is plenty of skill left in human specialism. For both high-skilled and low-skilled workers, she argues that working alongside automation can enrich their prospects and boost productivity.

Catalonia crisisDavid Gardner says statesmen are required to broker a solution to the ongoing turmoil in Spain. A fresh round of elections appear to be the wisest solution to allow both sides to maintain their credibility and bring the dispute back into the realm of politics.

Best of the rest

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The Broken Check and Balance — James Fallows in The Atlantic

What you've been saying

Democracy is no defence against secessionists — letter from Dr Mark A Wolfgram in Ottawa

“Sir, European leaders and cultural elites are still haunted by Yugoslavia and the role they played in its destruction, as evidenced by the rising level of comparisons between the collapse of Yugoslavia and what is happening in Spain today with Catalonia’s declaration of independence. Among EU leaders and the commentators in the quality press, the tilt is distinctly in the direction of arguing why Spain is not Yugoslavia. Sure, Yugoslavia was authoritarian (illegitimate) and Spain is a democracy (legitimate). Interestingly, though, Spain’s leadership in Madrid, from left and right, has long recognised that Spain is indeed a great deal like Yugoslavia: asymmetric federalism, sharp regional disparities in wealth, historical legacy of fascist mass violence and repression, unresolved consequences of a bloody civil war in the early 20th century, fiercely competing sub-national identities with a long history of competition.”

Comment by Sean Citizen on Why are we so hard on the cheats between the sheets?

“The title poses the rhetorical question ‘Why are we so hard on cheats between the sheets?’ Perhaps, for those who understand, no explanation is necessary; for those who don’t, no explanation is possible.”

Here’s to you, Mr Bogle — letter from Paul Bloustein in Ohio

“I have long admired Vanguard founder John Bogle for his insights about low cost passive investing and would not doubt his prediction (“Passive funds set to dominate equities, says Vanguard founder”). I toast his continued good fortune every month around the time my account statement arrives.”

Today’s opinion

David Gardner: Statesmen not lawyers are needed to resolve the Catalonia crisis
Elections could help channel the dispute back into the realm of politics

Martin Wolf: The challenge of Xi Jinping’s Leninist autocracy
Democracies have to recognise their failures to counter a China that sees itself as an ideological rival

FT Alphaville: The most elegant corporate tax reform

Sarah O’Connor: Why machines do not have to be the enemy
There are risks to workers from smarter computers, but human skills still have value

FT View

FT View: On executive pay, incentives have limits
Boards will always need to apply judgment and a sense of proportion

FT View: The untapped promise of digitisation in Britain
Digital technology can promote manufacturing productivity

The Big Read

The Big Read: Spot the difference: why DIY diamonds pose a threat to big miners
Producers of natural gems are unnerved by cheaper, cleaner lab-grown jewels

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