The Brexit mutineers and how the City of London will survive
EU legislation was back in the House of Commons this week and not all Conservative MPs were willing to back the government. Plus, how will Europe's financial centre survive Brexit and what kind of relationship will it have with the bloc? With George Parker, Jonathan Ford, James Blitz and Miranda Green of the Financial Times. Presented by Sebastian Payne. Produced by Madison Darbyshire.
Presented by Sebastian Payne. Produced by Madison Darbyshire. edited by Trixia Abao.
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Welcome to FT Politics, the Financial Times's podcast on British politics. I'm Sebastian Payne. And in this week's episode we'll be discussing the Tory mutineers and what kind of Brexit deal the City of London is looking for. I'm delighted to be joined by our Political Editor George Parker, City Editor Jonathan Ford, Whitehall Editor James Blitz, and political commentator Miranda Green. Thank you all for joining.
The EU Withdrawal Bill arrived in the House of Commons this week, and MPs debated about whether there should be a hard deadline in law on the UK's exit from the block. A dozen or so MPs rebelled against the idea, were labelled the Brexit mutineers on the front page of a national newspaper. At the same time, Ireland raised the prospect of vetoing the move to the second phase of negotiations in December, while the UK was warned that it can't expect to have a la carte access to the single market after it leaves.
George Parker, let's go to the House of Commons. What was going on there, this week? The EU Withdrawal Bill went to the floor, and there was lots of debate and lots of amendments tabled. What happened?
Well, this is the start of the detailed consideration of the Withdrawal Bill. It's the start of a marathon session of debates on the floor of the House between now and Christmas. And we had the opening skirmishes.
And initially we thought this was going be a fairly dull week, and in fact, they were going to save up the really big, difficult votes until the end of the process. But it was electrified by the fact that Theresa May, on the eve of these debates, quite out of the blue announced that she was tabling an amendment to the bill which was set in stone the moment, the precise moment, when we left the EU. In case you're thinking about organising a party, it's a Friday evening, 11 o'clock, 29th of March, 2019.
And that's really provoked outrage amongst many pro-European conservatives, because, if you set this date in stone, it doesn't give you the flexibility you need at the end of the process in case the talks have dragged on. And David Davis himself has conceded that talks could go on to the very last minute. Now, if you're going to need legislation to enact the transition deal and a future trade agreement, and parliament has to vote on it, then it's plainly obvious you're going to need some flexibility on the date, to give parliament time to do that.
So this was back to the language of the mob, Miranda, when these 12 pro-European conservatives were held up on the front page of the Daily Telegraph and called the Brexit Mutineers-- which, although it was probably meant to intimidate them somehow, it's actually worked the opposite way and bound them together and creates a lot of positive feeling, including from some Brexiters like Michael Gove and Steve Baker, who said, if these are colleagues who have reasonable and fair objections, then they should be allowed to voice them, because that's what parliament is about. It's about scrutiny of legislation, not just about railroading through bad ideas.
Well, but it goes to the heart of the problem with the referendum, which is this idea of the will of the people, in that vote, trumping any other forms of us expressing our democracy. So, you might say it's quite well and proper for MPs to consult their experience and indeed their conscience and indeed the views of their constituents and then come to a view on all these very complicated matters to do with Brexit that are coming through the House. But, you know, those newspapers that have championed Leave don't see it like that. And they just think that that one day-- which was also, after all, a narrow majority, 52% to 48%-- trumps anything that follows it.
You're quite right, there is a sort of feeling that being named as a "gang" in this way may have actually sort of hardened the resolve of the conservative rebels to try and push the government the whole time on concessions. And we've already seen signs that they might actually be successful in doing that, because, of course, the government only has a working majority because of cooperation with the DUP. They're very vulnerable to rebellions. And if around 15 to 20 Tories start to kick off and demand that the government gives way on things, they can vote in alliance with some of the opposition parties and force changes.
But this is the key thing, George, because Theresa May only has a working majority of about 12 at the moment. And if you have enough MPs, that cancels out her majority. And Labour obviously will do whatever it can to cause trouble on the Brexit mater.
And what was interesting about this gang is that there were some very senior people there-- the former attorney general Dominic Grieve, former cabinet minister [? M. ?] Nicky Morgan, Anna Soubry, who's a perennial anti-Brexit voice in the debate at the moment. So it wasn't sort of your usual cranks or what have you, [INAUDIBLE]. These were substantial people.
But do you think they actually do want to stop Brexit, these people? Or is this just, as some Brexit voice would say, it's a way of trying to get around the referendum result and just make sure we don't have a fixed leave date and we never actually leave?
Well, I think your point about them being serious people is borne out by some of the social-media commentary about that front page. They said this looks like a prospective cabinet rather than a bunch of mutineers.
Or a Marks & Spencer's advert for insurance.
Indeed. They looked very nice. The quality of the pictures was extremely high. And, as Miranda said, there's a danger now that they feel they've got nothing else to lose. They're mutineers, they become a party within a party, just as the Maastricht rebels did back in the 1990s.
Do they actually want to stop Brexit, they say? Of course they don't. I mean, Kenneth Clarke would probably be the exception to that. He didn't vote--
I think Anna Soubry, as well.
Yeah. Kenneth Clarke was the only person who didn't vote for the Article 50 bill. They say they don't. There's no amendment to this bill, at this stage, which would stop Brexit. I think you have to be clear about that. And I think, frankly, removing this ridiculous date from the bill, which was only put on as a stunt by Theresa May-- incidentally, George Osborne's Evening Standard said that it was designed to split the Conservative Party. I think it was done for a different reason. I think Theresa May's about to make some serious compromises ahead of the European Council in December, and she needed to throw a bone to the Euroskeptic right before this. She thought it'd be a fairly easy thing to do, but it's completely backfired.
That's exactly how I read it, too, Miranda, that it was trying to roll the pitch for coughing up another 20 billion pounds or whatever it is to try and unlock the next stage of Brexit talks and to say to the right flank of her party, actually, we are still going to leave, and it's going to happen on this date. So, even if it sounds a bit hairy, we're still going to get to the same destination.
Well, that cuts to the heart of Theresa May's continuing roll as prime minister, of course, because she's got to keep up this constant balancing act between appeasing the Brexit-friendly right wing of her own party and the compromisers on the other side, whilst trying to do a deal. This question about the money is obviously absolutely crucial, because we can't unlock the second stage of the negotiations without it being clear that Britain is going to stump up.
And whatever the details of that, May herself had a fairly good line around the time of her famously flopping Florence speech, which is to say, you know, we are Britain, we pay our way, and we meet our commitments. Whether that will be enough to sell it to the Brexit wing of her own party, I don't. know. I think she could, actually, because it seems reasonable.
I totally agree with that. I think the Euroskeptics in her party are less concerned about the money issue and much more concerned about getting over the line and achieving Brexit. And you have people in the cabinet, including Michael Gove and Liam Fox, who've signaled that they're quite relaxed about more money being handed over.
I was speaking to one prominent [INAUDIBLE] who was saying it's money down the back of the sofa. And in fact, it is. This money will be paid over a number of years. It's already in the treasury's forecasts. And most people think the money's just going to have to be handed over, as Miranda said, to unlock the talks. I think she will be able to achieve that [INAUDIBLE].
So this is from the UK perspective. But from the European perspective, things haven't looked entirely so smooth. We heard from the Irish Taioseach, Leo Varadkar, this week, who actually said, until we get a firm, hard commitment that we're not going to have a hard border, then essentially we will actually block moving forward there. And you can imagine the EU 26 are much more likely to do [INAUDIBLE] [? and ?] one of their member states says than a country that is about to become a third nation.
Yes, I think that's true. The thing to remember about Ireland is that Varadkar's in a fragile position at home, first of all. The second thing is, Ireland knows very well this is their moment of maximum leverage in the talks. They hold the whip hand.
There are three things being discussed. In the first phase of talks. Ireland's one of them. Once you get into the second phase, Ireland's a small voice among 27 member states. So this is the moment when they have to drive a hard bargain. They want in writing-- there won't be a hard border.
I think probably that's something that could be finessed, one way or the other, because the truth is, until you get into the second phase and discussion about whether Britain-- what the relationship is between Britain and the customs union--
The end state.
--you can't possibly decide what the border with Ireland looks like. But I think it's one of the things that's slightly blindsided London, just how hard Dublin is playing this.
I think it's also interesting from that DUP point of view, as well. You know, because May is governing only with the cooperation of a Northern Irish Party. And it's really not in the interests of the Northern Irish economy to have a hard border. So, again, I think there probably is some room, there.
But it's very interesting that Varadkar is playing hardball with this just at the moment when David Davis and May are kind of touring Europe, on a slightly odd charm offensive, trying to sort of move the conversation forward to the trade stage.
There is one other sort of paradox about the DUP being in semi coalition with Theresa May, of course, which is one of the solutions the Irish government's proposed is the idea of having Northern Ireland within the customs union, whatever happens to the rest of the UK-- which would effectively put the border down the middle of the Irish Sea. And that's totally unacceptable, of course, to Unionists in Northern Ireland, the idea of passport checks or frontier controls at [INAUDIBLE].
It was very delicate, in terms, of Northern Irish peace, as well.
And not helped by the fact that there is still no government in Stormont, in Northern Ireland, that talks between Sinn Fein and the DUP have pretty much collapsed entirely. And partly because of that is the fact that they are, as you said, George, almost in coalition with Theresa May's Conservatives.
Now, the other question, of course, is still this, the end state, about where Britain is going to head. And we've heard from Michel Barnier and other people, this week, saying there are really only two clear options, here-- the Norway option, and the Canada option. So you join the EEA. You have to take up all the EU's laws and regulations, but you don't get any say in making them. But the economic model continues as it is. The City of London will continue to have access as it does.
The other option's the Canada one, which is the one the more swashbuckling Brexiters like to talk about, because you could make your own trade deals, make your own legislations. But you add a lot of friction with the EU, from day one, there, and there's still no sign of anything in Theresa May's government that she's willing to say which one it's going to be.
No, that's true. I think she would prefer to have this debate pushed through into 2018-- the further you can kick the can down the road, the better-- and to get over the hump of the December council, first of all. But you're right, there's no agreement. And the problem is, though, with the Canada-style deal, beloved [? of ?] the Euroskeptics, is it focuses on goods and doesn't focus on services. Now, you're right, The EU makes a very binary distinction between two types of models. And it's fairly obvious that, when they produce their guidelines, if they do, on a future trade deal, it will be very much along the lines of the--
Except for phase 2?
Yeah, in the phase 2. It will be very much along the Canada model.
Now, There are those in the UK who say, well, fine, that's what they're saying at the moment, but they are going to have to budge. City of London is an interesting case in point, that we need access to the European Market, obviously, but people would argue that actually European car manufacturers, farmers, insurance companies, whatever, need access to the deep pools of liquidity in the City of London, and therefore there'll have to be some kind of modus operandum between the EU, the eurozone, and the City of London to make things work for both sides.
But that's the negotiation. And the negotiation is going to really concertinaed into nine months, which is a ridiculously short period of time, given the normal glacial pace of EU negotiations.
And hugely hampered by this idea that Britain doesn't really know what it's trying to achieve. You know, you had European business leaders visiting London this week and coming out of the meeting in Downing Street saying, really, the onus is on the UK to say what it wants. And as Varadkar made the intervention about the hard Irish border, he also said, this week, that in fact it's extraordinary to think that this is a 10-year campaign from people in the UK who wanted to leave the EU and, 18 months after a referendum, we still don't really know what it was they were trying to achieve.
David Davis went to Berlin, George, to try and get German businesses to ramp up the pressure on the German government to try and push forward a bit more flexibility. And you had this very curious line that's raised the interest of people-- went down like a lead zeppelin, according to someone who was in the room-- which was saying that you shouldn't put prosperity over politics. Which, of course, many people looked back at David Davis and thought, well, hang on a minute. Isn't that exactly what you're doing?
And it seems we're right back to this stage we were, years ago, where the UK doesn't seem to understand what the EU wants and the EU doesn't seem to understand what the UK wants, either.
Yeah, I think that's true. And I think there's been a misconception all the way down the line, from the Brexiteers, that, in the end, Prosecco manufacturers and BMW will prevail on their governments to do a deal. The truth is, there probably will be, at the end of the day, a free-trade agreement which covers goods, because the EU runs a massive surplus in goods with the UK--
Supply chains, in particular.
--including BMW cars and Prosecco. And what they don't want to do is offer us a trade deal on services where we have a massive trade surplus. When it comes down to it, that's the kind of deal and the kind of calculation they will be making.
And, in the end, of course, there is a political dimension to all of this I think I've given this example before, but when the Eu was discussing putting sanctions on Russia, there was an intense lobbying operation by BMW against Merkel's government, saying, don't do it. We sell lots of BMW in Russia. And the sanctions went ahead anyway, because there are sometimes bigger things than commercial realities.
I think it's important to also remember that David Davis has signalled that he's only going to carry out this job as Brexit negotiator, and then he's leaving the stage. So there's this kind of interesting idea about who is going to take the political hit for any compromises that have to be sold back to the British people-- and, indeed, sold back to the House of Commons. And clearly, from the rest of the cabinet's point of view, and probably from May's point of view, they will hope that Davis, who's already been sort of knocked about for his speech in Berlin this week, will have to be the one to make these compromises.
But it's very dangerous for the government because, this argument will not go away. If they have to stick to some sort of arrangement where we are rule-takers from the EU, that will not satisfy a large chunk of hard-line Brexiters.
That's a very interesting point about Mr. Davis, because, when he came in, he was one of the more bullish ones about Brexit, saying that it's all going to be far more brokered, the fastest, quickest, bestest trade deal known to mankind. And yet he's now become one of the more practical voices, George, that, you know, he's the one who's advocating transition, happy to hand across money-- at least in several different parts here. And Miranda, if you could imagine here, he will go off after 2019 and it will be up to someone else to try and figure out this free-trade deal.
Well, I suppose the person picking up the pieces in 2019 will be Theresa May, who's a convenient human shield to be disposed of soon after Brexit's taken effect. But you're right, Davis has been-- proved himself to be more pragmatic. He's formed an interesting alliance with Philip Hammond, who sees very clearly the economic considerations of Brexit.
And we talk about concessions. What we're really talking about is, every step along the way, when there's been a crunch point, Britain's hauled up white flag. You know, whether it's the sequencing of the talks, which was supposed to be the big row of the autumn, we gave in on that. Whether it was the role of the ECJ, we gave in on that. Transition on the EU's terms-- yep, we're signing up to that. And money-- yep, 50 billion euros is on the way, I'm pretty convinced.
So everywhere down the line-- David Davis does a great job of sort of doing the breezy, confident, optimistic thing. But, in the end, he's quite realistic. And, in the end, he knows we have very few cards at our disposal.
While the Withdrawal Bill has been trundling through the House of Commons, the uncertainty over what Brexit means for the City of London has been growing-- and whether it's receiving due attention from the May government. David Davis, the Brexit secretary, tried to reassure some senior bankers this week and raised the possibility of a special immigration arrangement after the UK leaves the bloc. But until the May government decides what kind of deal it wants to broker with the EU, can the City really make adequate preparations?
Jonathan Ford, do you think the UK government really is taking into account the City's special interests? It's obviously one of the great national assets, about 7% of GDP and all the rest of it, but obviously it's not really that enthusiastic about process of Brexit.
No. I think the City is very enthusiastic about the process of Brexit-- and particularly, if you like, the very large institutions, a lot of them foreign-owned, who are going to have to navigate these changes as they come down the path over the next few years. I think if you ask yourself why the government, if you like, left the City to one side while it's dealt with some of the other political problems of Brexit, there's quite a good illustration of why this might have been, when you look at the reaction to David Davis's reassuring comments to the city bankers this week, which was--
Immediately, the reaction in the newspapers, or some newspapers, was to say, well, that's typical, isn't it? You know, the government essentially is going to basically do a special deal for its friends in the City. And I think this is one of the problems the government has, in touching this sector, and, I think, one of the reasons why it's been slightly wary about going there until now.
Well, this is the populist mood that we're at, where we find ourselves, at the moment. And I'm sure all the people who voted to leave the EU probably couldn't really care much or less what happens to the City of London. And the May government is focused on keeping those people happy.
Yes, I think that's right. I think the government's view is that, I think-- well, the government's view, I think, has been-- whether this is now changing is a good question. I think the government's view has been that the City--
--bit like a lot of the rest of industry. The problem it faces is one of costs. There are going to be costs associated with the transformation that goes ahead, when we leave the European Union. And essentially the question for the government is how to manage that by a series of initiatives to basically try and buy off some of the worst aspects that people complain about and hopefully make adjustments to things which will encourage people to invest more and do more things in the UK.
I think, with the City, there's a particular problem, though. The I would put it is this. And this is, I think, one of the issues that's particularly breaking at the moment and means that the government is having to start talking to them a bit more.
And that is that, whereas most of industry-- if you think about a car plant in the UK, you've put down your investment, your costs may go up when we leave, but effectively you're not going to demolish a Mini-making factory in Oxford and rebuild it in Slovakia. You might rethink your investment plans in future, but you're stuck with what you're-- it's a sunk cost.
In the City, there's a much more existential issue, I think, with certain firms. And you see this in the tweets of-- the somewhat ubiquitous tweets, now-- of Lloyd Blankfein. I think he's done 26 in total, of which-- [LAUGHS]
--about a third are now on Brexit. I think the City's issue is this-- if we lose our licence to operate, It's not just a question of the car plant becoming redundant, it's basically that we cannot continue to do some or all of the business that we do from London.
So, James Blitz, this really feeds into the wider discussion about what kind of Brexit model we're going to follow. And there's two board streams-- the Norway one, and the Canada one. And the May government sort of, again refuses, to acknowledge, as we hear Theresa May saying, we don't need to be bespoke, though. There will be a British option. David Davis, the Brexit secretary, has said this, too.
But until we decide, really, are we going to hug Europe in regulatory and legal compliance, or are we going to do our own thing? And the City can't really decide what it's going to do.
Well, yes. I mean, in a sense, that is broadly the situation. I mean, up till now the negotiations have been very much focused on what's called the "phase 1," which is discussing the issues, Northern Ireland, money, and the status of EU citizens, in order to get to phase 2, which is the discussion about the framework for trade. And the likelihood is that we will move to that new phase and that the British will put down some money.
But, once we get to that, there never has been a proper discussion within the UK cabinet about what the framework will be. And the problem is, as you say, that while Mrs. May says that she wants to have a special, not off-the-shelf, but bespoke deal, one which goes well beyond the Canada deal signed with the EU, the Europeans are making it very clear that that isn't the case. There isn't going to be some special relationship for the British. They've either got to take Canada, which is effectively third-country and a deal on goods, or, alternatively, EEA, which is basically accepting current situation but without the political superstructure. In other words, freedom of movement and privileged access to the single market.
And the basic problem is that, in the UK, the binary nature of that choice, first of all, hasn't really sunk into people. I don't think there's an appreciation that the British are not going to get their way on this next year, or at least it doesn't look like it. The Europeans have held on the first phase and are likely to hold on the second.
And secondly, once that comes through, whether they are actually going to choo-- which way they're going to go, one or the other.
Can I just leap in, here? I don't want to overstate this, but there is a kind of faint, you know-- I think I agree with your broad analysis. But I think you have to look at this in the context of the decisions that have been taken, around the table, by the 27. And I think that, whatever is being said in Brussels at the moment, there is no doubt that there is not a set position for the 27 as to what they will do, actually, in the broadest sense on where they go next, I think.
That doesn't mean that-- I think there is a general view that, given the time and the constraints, political constraints, there should be certain sort of plain-vanilla type options, whether they Norway-- and some people look at it in terms-- but the question of how many of those options there may be and how much flexibility there may be around those options, I think, is not yet decided.
And if you looked at those two broad options, it would be Norway that would obviously protect the City of London the most, because it would essentially continue our economic model and our structure. Whereas Canada--
I don't agree with that, actually. I don't think Norway is necessary-- I mean, look at it this way. We were in the European Union. We had all the seats at the table. And David Cameron and George Osborne spent a lot of time fussing around, saying they wanted a special nuclear button to press if anyone tried to pass any financial legislation.
If we were in the EEA, we have to be realistic, we would not be round the table when financial regulations or whatever came down the pike would be for us to implement.
Nobody is suggesting that the EEA is good option. I mean, it's clearly not a good option.
It's not a good option. The question is whether it ends up being a better option, as the British come to the realisation that Canada and nothing other than Canada is the only alternative.
I agree with you that things are not completely set on the European front. I mean, there is a school of thought that says, on the first phase, the discussion about the three issues in phase 1, the EU has been very united. It will be more difficult for the EU to remain united, the 27 to remain united, as they approach the issue of trade, not only in the framework discussions but beyond. But, even so, at the moment it does look like that is the choice.
But I suppose the problem, James, is that, in political terms, the Norway one doesn't really solve anything. Because, as Jonathan was just saying, it takes the UK from being a rule-maker to a rule-taker, and it would probably require free movement of people to continue, in some form. Which is very much against what people voted for. So, in political terms, if not economic, Canada does seem the route we're most likely to go down.
I think you've got to ask yourself, what are we going to be in May-June--
--next year? I think that's the question which, I think, is more difficult. These issues have not been properly discussed-- not only in cabinet, within the British political debate. And I think that, as people start to look at what Canada might mean-- and that there are three champions for Canada in the cabinet. There are plenty of people in the cabinet.
Liam Fox, Boris Johnson-- who basically say, clean break, Britain [INAUDIBLE], Britain-- global Britain, et cetera. There are plenty of champions. But whether there start to be more overt champions for an approach which is much more closely aligned to the EU is a question. And whether the question of immigration remains a salient in politics in six months' time, as it is now, is another question, as people see, for example, that net migration continues to come down, is another issue.
So I would say certainly at the moment it's hard to judge, but in six months' time things may look different.
Jonathan, there's two buzz words that go around a lot in Westminster about the City of London. One is "equivalence," and one is "passporting." So, in a nice, crystal-clear description, can you explain what they both mean and why they're important and what the UK might get?
OK, well, passporting, simple. It's not going to exist under any of the scenarios we've discussed. It is a mechanism for members of the EU to transact-- makes it easy for them to transact business cross-border. So a bank can sell its products from country A to country B. Just, it's a mechanism.
Under anything other than Norway, it goes-- what's equivalence? Equivalence is one thing that people think that could replace it. Got various forms, but what it effectively means is that two areas, one being in the EU, the other being in the UK, look at each other and they say, we are so close to each other in regulation, it makes absolute sense not to disrupt the flows of business between us. We should continue to operate, broadly as if we are one entity for these areas of financial business.
Is it likely to happen? It's a very good question. I think it is-- probably, if you look at what we've discussed as the Canada option, it is-- some form of equivalence is the way in which, if you like, the EU will stop the UK from, quote, "floating off into the mid-Atlantic" and some European countries, notably countries like Luxembourg and Ireland, which see the symbiotic relationship with London as important, would probably be quite keen on that.
Because, on Exit Day, our regulatory regimes will be exactly the same. They may diverge over time. But the key problem with equivalence is that, at present, through the Mifid II things that are coming through next year, is that it only lasts for 30 days-- and, obviously, for the City of London, you'll need more than 30 days-- to provide that reassurance for businesses that it's not going to get kiboshed and then undermine your ability to sell into the single market.
Yeah, well, clearly, look-- equivalence's design. No, well, we have to be realistic. Look at where equivalence has operated, such as with the United States over derivatives. What you find, of course, is that although there are all these sort of technical withdrawals that are in place, it can be yanked-- it doesn't get yanked. Because people see the merits of keeping it going.
I agree with you, though, that, given the interdependence of Europe and the UK, in terms of financial services, it would clearly be desirable, from the perspective both of customers and of banks, for there to be some sort of agreement which meant that there would be more certainty about the continuation of the operation. Now, that will be one of the issues which I think they will have to debate.
And finally, James, this all feeds into where we are in the Brexit negotiations. And a lot of people like Lloyd Blankfein, who's been tweeting a lot about this issue, is wanting certainty. Because by the time we get to the beginning of 2018, you'll really be coming down the rails to Brexit Day. And the City wants to know about transition. Is there going to be a transition? On what terms?
And we sort of assume it's going to be a standstill transition. Nothing's going to change, for those two years after 2019. But people want to know what's happening. And I think, what do you think the government could do to say to people, you know, it's going to be OK, we are listening to you, and we will do our best to get an equivalence regime and have rules and regulations that means you can continue your business as much as normal?
Well, the short answer is that everything depends on what the outcome is going to be, in the immediate future, on the December council, which is where all these things are going to be discussed. My assumption is that the British are going to make the commitment needed, in terms of finance. That's some of the mood music coming through.
I don't think that the Europeans will say that we can move to the next phase, phase 2, which is the discussion on trade. But I think the important thing is that, if the Europeans set out the guidelines for the transition, that will be an important indication, to business in the UK and in Europe, that the transition is on and that something that can be agreed in the first couple of months of next year. And, at the end of the day, that is important.
Now, what form the transition takes, since you asked me about that, that's still somewhat uncertain. Is it just going to be a two-year extension of Article 50, which is pretty much dynamite? Or can you have some kind of arrangement which basically allows the incorporates [INAUDIBLE] into UK law for another two years, temporarily? That's still to be decided.
But I think the critical thing is, if you're asking, when will business get assurance, the important thing now is that, at the European Council, the Europeans say, we move to phase 2, and we set out the guidelines for the transition.
And finally, Jonathan, do you think there's much danger of the City of London being upended as the financial centre of Europe and arguably the second-most-powerful financial centre in the world? Because people say, actually, you know, the culture, the location, the laws, the skills, they're not going to change even through Brexit. But, at the same time, there are clearly still big questions to be answered.
I think the City does business all over the world, not just with Europe. Europe is clearly an important piece of why the City is as powerful globally as it is. So there is the scope, in my view, for, if you like, everyone to end up a loser.
There is no doubt that, you know, underlying Lloyd Blankfein's tweeting this week is the real concern that Goldman Sachs will not make as much money [LAUGHS] in Europe if it has to split up its operations. And he doesn't want that to happen, funnily enough. And neither do most of the others.
So this, I think, is, will the City lose its place? It partly comes down to what politicians are able to agree and how flexible they are willing to be. It also depends, though, on businesses not doing things which will preemptively and unnecessarily damage their operations in Europe. And, to be honest, we just don't know where that's going to go.
And that's it for this week's episode of FT Politics. Thank you very much to Jonathan, James, George, and Miranda for joining us. We'll be back next week for another instalment.
FT Politics was presented by Sebastian Payne and produced by Madison Darbyshire. Until next time, thanks for listening.