No relief for City of London in Brexit transition deal (or is there?)

London

According to the FT, the City of London needs to plan for a “cliff-edge” Brexit after European regulators declined to offer any formal guarantees for how business can be conducted during the transition period. The Bank of England is excepted to unilaterally clarify this week how banks and insurers should operate during the 21-month transition agreed on Friday by the European Council, by formally stating that firms can rely on it, even if it is not yet legally finalised. However, EU authorities argue that “nothing is agreed until everything is agreed” and are insisting banks keep to a June deadline for submitting their new licence applications.

In a separate piece in CITYAM this morning, the UK’s Confederation of British Industry's chief economist Rain Newton-Smith said there was no doubt uncertainty around Brexit is "looming large for this (the financial services) sector", but it could be turning a corner off the back of the transition agreement.

"That means that a lot of the banks and insurance companies will be able to put the pause button on those contingency plans that they were having to put in place should we be in a position in a year's time where we didn't have a new agreement with the EU".

Brexit Partners are doubtful that any banks or insurance firms which have completed a comprehensive Brexit risk assessment are going to substantially change their plans based upon existing EU UK negotiations. There is too much at stake. Transition is already very complex and firms are still rightly very worried about the risks, costs and effort associated with Brexit.

Dr. Ray NultyComment