City fury as friction-free dealing is ruled out

THE White Paper sparked fierce controversy in the City yesterday.

The agreement effectively accepted that Britain will not have access to the EU’s single market for its services industry, which incorporates the City.

That disappointed many in the services industry who want friction-free access to the EU for their business.

At the same time, the plans caused others to fear that British services firms could still be left shackled to Brussels rules.

That row centres on whether the City will be able to set its own standards and regulations after Brexit – or effectively have to adopt those in the EU.

Many in the services sector had wanted socalled ‘mutual recognition’ – which would basically allow British firms to set their own regulations, but still have access to EU markets provided they achieve the same broad aims as those in Brussels.

But instead what the Brexit White Paper is suggesting is something called ‘equivalence’, under which the EU decides whether the rules in the UK meet its standards.

Financial firms say that any such deal would effectively stop them from setting their own regulations.

By following the EU’s existing ‘equivalence’ rules it is feared this will mean permission for UK-based banks to operate on the Continent could be withdrawn at any moment.

The head of Lloyd’s of London last night warned that the government’s plans would speed up the departure of firms from the UK.

Inga Beale said the White Paper would see the 300-year old insurance market go ‘full speed ahead’ to set up its subsidiary in Brussels – and spur others on as well.

She said: ‘It’s very disappointing. We will no longer be licensed to write business or offer insurance within the EU.

‘If you’ve got insurance for your pet and you like to travel to the continent for a holiday, there’s a question as to whether your policy will cover you - so this is really serious stuff.’