The EU’s chief Brexit negotiator warned the UK it would not be granted a permanent deal allowing City of London access to European markets, in words that will intensify concerns among financial services companies about the settlement they will receive.
Michel Barnier told MEPs in Strasbourg that people in the UK should “not kid themselves” about the offer they will get on financial services. There will be no open-ended provision for financial services “equivalence” as a result of the upcoming talks over the two sides’ future relationship, he said.
His words came after it emerged the UK would be seeking a “permanent equivalence” regime for financial services that would last for “decades to come”. The UK’s opening position in the financial negotiations was revealed yesterday in a photograph taken by a long-lens camera of an unreleased briefing paper carried into Downing Street on Monday.
The document said Sajid Javid, the chancellor, would seek a full chapter on financial services in any free trade agreement, with “comprehensive, permanent equivalence decisions”. [...]
“There will not be general open-ended or ongoing equivalence negotiations on financial services,” Mr Barnier said, in an apparent response to reports about the UK’s position. “We will keep control of these tools and will retain a free hand to take these decisions.”
He added that Brussels was worried by statements from “some UK politicians” who were promising to break free of EU rules after Brexit. The EU has repeatedly insisted that the further Britain diverges from its regime, the more distant the ultimate relationship between the two sides would be.
In an opinion article for City AM, a London-based financial newspaper, Mr Javid warned that some parts of the City would diverge from existing Brussels rules in a move that could lead to accusations of Britain trying to “cherry pick”.
He said in the same article: “Findings of equivalence now and measures to sustain trust and co-operation . . . offer the best solution to the question of agreeing our relationship with the EU this year”.
He added: “This is important not only in the short term, but to establish the norms and ways of working with the EU that will endure for the decades to come.”
Equivalence would, if granted, provide access for a specific range of sectors — central clearing houses, investment firms and trading venues. But, Mr Barnier said, the decision on whether to grant equivalence would rest with Brussels.
“We are not negotiating on these topics,” he said. “Rather we are checking if there is consistency and where possible we will grant equivalence in some sectors of the financial services industry.” [...]
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Related article on Financial Times: Sajid Javid to push for ‘permanent equivalence’ for City in Brexit talks
Related article on City AM: Sajid Javid: I’ll give the City the flexibility it needs to thrive outside the EU
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