Brexit: Germany’s Finance Minister says EU ‘should not punish Britain’ to keep City benefits

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The EU should offer Britain a “reasonable” Brexit deal because financial services offered by the City of London benefit Europe as a whole, Germany’s Finance Minister has said.

Wolfgang Schaeuble told German newspaper Tagesspiegel London’s financial centre “serves the whole European economy”, so it was preferable to “keep Britain close to us”.

“We don't want to punish the British for their decision,” he said, in comments released before the interview is published in full tomorrow.

“London offers a quality of financial services that are not to be found on the continent. That would change a bit after a separation, but we have to find reasonable rules here with Britain.“

Theresa May is due to trigger Article 50 by the end of March, after Parliament voted overwhelmingly in favour of allowing the Prime Minister to launch formal divorce talks with the EU.

Currently, banks, insurers, asset managers use an “EU passport” allowing them to operate across the 28-nation bloc from a base in Britain.

EU leaders say access to the single market can only be granted in return for accepting the free movement of EU citizens and complying with rulings from the bloc's top court, both of which are unacceptable to many of those who voted for Brexit.

Alternatives to passporting mainly include “third-country regimes”, whereby the EU allows British financial firms to serve continental customers on condition they abide by rules similar to those inside the Union.

Mr Schaeuble, 74, has been Finance Minister of Angela Merkel’s leading Christian Democratic Union party since 2009.

The UK is home to 80 per cent of the highest-paid financiers in the EU, according to the European Banking Authority.

More than 4,000 EU bankers, fund managers and compliance experts in the UK earned over €1m (£864,000) in 2015 – nearly a third more people than the previous year.