UK financial services sector ‘to get access’ to EU markets
• Industry will be allowed a form of post-Brexit participation, says City
The EU has indicated it is willing to provide a form of access for Britain’s vast financial services industry after Brexit, says City Minister John Glen.
Glen said on Monday the transition deal agreed by Britain and the EU in March allows financial firms to plan their future with confidence.
“The fog is clearing…. We are already seeing progress,” Glen told the CityWeek conference in the Square Mile’s Guildhall.
“The EU have now recognised that there will be some form of market access in financial services, having previously dismissed the idea.”
Britain’s financial services sector looks set to be one of the most divisive areas in the Brexit negotiations, with Britain demanding a generous deal while the EU refuses to shift from its insistence that Britain’s red lines — such as ending the free movement of workers from the EU — make that impossible.
Britain has proposed a future trade deal with the bloc for financial services based on mutual recognition of each other’s regulations. This model would be maintained by close cooperation between regulators and financial policy makers. But EU policy makers have rejected the idea, saying it has never been done before on such a scale.
Catherine McGuinness, the policy chief for the City of London, home to the financial district, said mutual recognition was the “only game in town”.
The alternative is a one-sided system whereby the bloc grants market access if a country’s rules are aligned with its own.
Anthony Belchambers, the chairman of Saxo Capital Markets, said there was still a question of whether the European bloc had the political will to agree to mutual recognition.
Market access would involve accepting EU rules to some extent, which pro-Brexit legislators dismiss.
“The reality is if you want access, it’s going to come at a price. You have to be rational about this,” Belchambers said.
Meanwhile, banks, insurers and asset managers are already moving staff to new hubs in the EU to be sure of maintaining links with customers there, regardless of what is agreed in trading terms.
Some EU policy makers fear Britain will ease rules for banks to keep London as a dominant financial centre after Britain leaves the EU in March 2019.
Glen dismissed talk of a “race to the bottom”, a move that would make it much harder for Britain to secure access to the EU’s financial market.
“We do not intend to rip up the rule book after Brexit,” he said.