France says City at risk post-Brexit

One of the most important sectors at the heart of the Brexit negotiations will be financial services.

As Mark Carney said, London is "effectively, the investment banker for Europe" and the City is the financial capital of the European Union.

Nearly 80% of foreign exchange trading and 30% of all bank lending in the EU flows through the UK.

How much that will change after Britain leaves the European Union is a matter of increasingly tense debate.

In the UK, very senior figures within the financial services sector argue that it is "nonsensical" to argue that after Brexit, large amounts of euro-denominated trading should move on to the continent.

They point out that significant amounts of dollar-trading are executed through London - and neither the EU nor the UK has a single-market agreement with the US.

Many on the continent of Europe see it differently, saying that financial oversight will only be possible if euro-trading valued in trillions of pounds a year is put under the direct jurisdiction of European Union-based regulators.

The biggest sector seen at risk is euro-denominated clearing, the billions of pounds worth of derivatives products traded every day to insure companies, for example, against interest rate changes, currency fluctuations and inflation risk.

Security 'vital'

Michel Sapin, the French finance minister, told the BBC that it was a question of control.

"I believe that there is an issue of sovereignty and security of European monetary markets and therefore the majority of the clearing houses cannot remain in London," he told me.

"There will be movement, there will be a displacement and actually many of the financial institutions are already preparing themselves towards that."

Many believe that if the trading moves, jobs will move as well.

"I don't see how it could be a good thing for the City," Mr Sapin said.

"The City will remain a large financial centre, will remain important for Europe as well as for the rest of the world.

"But the security of the monetary system is something that's of vital importance for any given country or any given groupings of countries - such as the case of the eurozone countries."

Hundreds of billions of pounds of trades will be at stake.

At the moment, the two sides - the UK and the EU - appear a long way apart.