EU countries compete to host London-based agencies after Brexit

European leaders are set to tussle over the future of EU agencies located in London in the first test of the bloc’s post-Brexit unity.

At a summit in Brussels on Thursday the EU’s 27 leaders – minus Theresa May – are expected to take the next crucial step in moving two EU agencies out of the British capital.

The EU is insisting the European Medicines Agency and the European Banking Authority, both located in Canary Wharf, find new homes after Brexit.

With the Brexit clock ticking, the stage is set for a sharp-elbowed beauty contest, with some eastern European countries insisting they should be first in line for London’s lost prizes.

The agencies are not only seen as prestigious, but the regular flow of visitors is a reliable boost for hotels and local businesses. Every year about 36,000 scientists and regulators visit the medicines agency, which was set up in 1995 to monitor and supervise medicines across the EU.

At least 21 countries are thought to have made a bid for the medicines agency, with a smaller number throwing their hat into the ring to host the banking authority, which started its financial supervision work in 2011 after the crash.

Ministers and diplomats have been touting the attractions of their cities at meetings in Brussels. Smart websites have been launched to extol transport links, scientific prowess and local schools.

A decision on location is expected in October, but an early hint of tension came on Tuesday when European affairs ministers failed to agree on a voting system to select the new host cities.

EU countries have split over what is described in Brussels as “Eurovision song contest rules” – an elaborate three-round voting mechanism to choose the host cities, which may be more complex than picking a catchy tune in the kitschy singing competition.

This system, proposed by the European council president, Donald Tusk, and European commission president, Jean-Claude Juncker, would see the agencies chosen by majority vote. But some countries in central and eastern Europe are insisting the decision should be unanimous.

Some newer member states fear the EU is reneging on a 2003 promise that they should get priority in the distribution of new agencies. Bulgaria, Romania, Croatia, Cyprus and Slovakia do not have an EU agency.

In Germany, meanwhile, Bonn is vying for the European Medicines Agency and Frankfurt has an eye on the European Banking Authority, even though Germany is already home to the European Central Bank. Angela Merkel’s chief of staff recently tweeted that the German government was “fighting for both agencies”.

The Tusk-Juncker draft guidelines stress the importance of choosing locations that can guarantee “business continuity” after Brexit and “a smooth transition to the new location”. “Geographical spread” is desirable, but not essential.

The two agencies employ 1,050 people and diplomats are worried talented staff may leave and disrupt smooth running.

The EU has a long tradition of squabbling over agencies, and some location decisions take years. Silvio Berlusconi offended Finland in 2001 during an EU discussion over the location of the European Food Safety Authority. “Finns don’t even know what prosciutto is,” the then Italian prime minister told his counterpart.

Parma, rather than Helsinki, won that contest. But the Italian victory was bittersweet for food regulators, who complained for years about insufficient school places and the city’s poor flight connections to Brussels.

Tusk and Juncker are determined to avoid a political bunfight. According to their criteria, candidate cities must demonstrate transport links, availability of schools, medical care for staff and their families, and job opportunities for spouses.

The Brexit clock adds time pressure and reduces chances of making trade-offs on other things – the time-honoured EU way to make a deal. “The EU has a very bad track when it comes to decisions on locations on agencies,” a senior EU diplomat said. But the source was “almost 100% convinced” the decision would be taken on Thursday. “We simply cannot afford not to take this decision. We have to prove as EU27 we can be efficient.”

Equally, diplomats from central Europe showed no sign of backing down in their demands for “geographical spread”.

The deadline for making an application to host an agency – a short video presentation is suggested – is the end of July.

The Brexit department of David Davis has claimed the agencies will be “subject to the exit negotiations”, but the EU is unanimous on this point: it insists EU agencies must leave London, with the UK picking up the relocation bill.

Additional reporting by Philip Oltermann