City expects extension to Brexit talks

BORIS JOHNSON has promised 2020 will be the year when the UK gets Brexit done – but the City seems less certain.

The majority of financial services firms think the Prime Minister will be forced to seek an extended transition period to iron out issues over equivalence and market access, according to research by accountancy firm EY.

Out of 120 financial services firms surveyed, 59pc believed an extension would be agreed, with most of those expecting an extra year of talks. Almost two thirds of the groups surveyed – including banks, insurers and asset managers – believed broad principles of the deal will be struck by next summer, with both sides needing longer to work through more complicated decisions on financial market access.

Mr Johnson has pressed ahead with a short timetable for taking the UK out of the EU’S single market and customs union. With Parliament set to pass a withdrawal agreement next month, Mr Johnson has said he will introduce legislation to prevent the 11-month transition period for trade negotiations from being extended. It leaves the Government with a narrow window to forge a new agreement before Dec 31 2020.

Ursula von der Leyen, the president of the European Commission, has said it is too narrow, calling for a “sequencing” process in which talks are handled in blocks to avoid a “cliff-edge” exit.

EY partner John Liver said the PM’S approach was “not what firms were expecting or hoping for”, but added: “The sector had prepared for a no-deal scenario in October this year, so there is confidence that it will be ready to weather a ‘no extension’ scenario if ultimately required.”