Passporting rights in the EU give Britain much of its financial clout. Brexit has now cast its long shadow over it.

In a statement that could shed further light on the stakes of the on-going negotiations between London and EU, Jens Weidmann, a policy maker at the European Central Bank has made it clear that unless Britain is part of the European Economic Area, it is set to lose its passporting rights.

Passporting rights allow British financial institutions to operate in the EU.

“Passporting rights are tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area,” said Weidmann in an interview with Britain’s Guardian newspaper.

For Britain, passporting rights are significantly important since it is the major factor that supports the City of London, its financial district.

Losing passporting rights could potentially deliver a significant blow to the country. After all Britain is known as the financial capital of the world.

Weidmann has stated he expects a few London-based businesses to reconsider the location of their headquarters. He however, does not see a mass exodus.

“As a significant financial center and the seat of important regulatory and supervisory bodies, Frankfurt is attractive and will welcome newcomers. But I don’t expect a mass exodus from London to Frankfurt,” said Weidmann.

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