Financial Services ruled out of any future trade deal by EU.

EU Brexit negotiators have taken a tough line on financial services in any future trade deal, insisting that future arrangements should be based on existing “equivalence” rules for non-EU countries rather than a more ambitious deal. The European Commission has reportedly played down the risks of cutting off the City from EU businesses, claiming a smaller UK financial sector could benefit financial stability and the development of capital markets in the EU27.

Michel Barnier, the European Commission’s chief negotiator, publicly ruled out a special deal for the City in December, stating that Theresa May’s red lines on Brexit made the loss of the so-called “passporting rights” inevitable.

“In leaving the single market, they lose the financial services passport,” he said in an interview with European newspapers at the time. German government officials have however behind the scenes suggested that the UK could retain passporting rights in exchange for continued contributions to the EU budget, according to reports that surfaced earlier this month.

Over 5,400 British firms rely on passporting rights to bring in £9bn in revenue every year to Britain. UK Finance has said the loss of passporting would be “disruptive, costly and time-consuming”.

The CEO of UK Finance, Stephen Jones said: “The considerable growth in trade in services between the UK and Europe highlights the vital importance of this sector for our economy. It is an important reminder that any future EU-UK agreement on trade needs to provide for cross-border market access in services for the benefit of consumers and businesses on both sides of the Channel.”

 

Dr. Ray NultyComment