City chiefs call for transitional deal to prevent firms defecting

LONDON’S POWERHOUSE financial sector has called on the Government to prioritise a stopgap deal with Europe after Prime Minister Theresa May started the clock ticking on negotiations.

Mrs May sought to assure the UK would be looking for a “smooth and orderly exit”, but City bosses and financial services groups said it was vital a transitional arrangement was agreed early in the two-year negotiations to prevent companies defecting to rival financial centres across the globe.

Mark Boleat, policy chairman of the City of London Corporation, said this would “provide clarity and reassurance to businesses and consumers”.

He added: “This will guarantee continuity of cross border trade after the end of the Article 50 negotiation period and provide a bridge to the date when the new partnership agreement is ratified.”

Andrew Kail, head of financial services at Pricewaterhouse-Coopers, warned it would take many financial services firms up to five years to adapt to the new trading rules.

He said: “It remains critically important that access to markets and customers is maintained both here and overseas.

“Inevitably the full transition to a new regime will take many financial services companies longer than two years, not least because of existing and emerging regulations. The scale and pace of change is unprecedented.

“Some firms have estimated the changes would normally require between three to five years.”

Think tank TheCityUK and the Investment Association both said it was important for the UK to agree a “bespoke” deal with the EU.

Chris Cummings, chief executive of the Investment Association, said: “Achieving a post-Brexit deal that is mutually beneficial for the UK and the EU is key to our industry continuing to service its clients across the world.

He added: “We need a bespoke agreement that hinges on mutual market access, access to global talent, legal certainty and preserving the entirety of the UK’s financial services ‘ecosystem’.”