The UK has repeated its demands for a post-Brexit agreement on financial services to go way beyond the EU’s current standard with third countries in a new government paper, warning that a ‘hard Brexit’ will damage the EU.
The paper published on Monday (20 August) insists that “ruletaking (from the EU) …will simply not work for this sector”
The UK believes that the City of London’s status as Europe’s leading financial services centre gives it a position of strength in the Brexit talks, warning that the EU economy will also be hit if London suffers as a result of the UK’s exit from the EU.
It states that UK-located banks underwrite around half of the debt and equity issued by EU companies, that 1.4 trillion of European assets are managed in the UK, and that more than twice as many euros are trading in the UK than in the entire eurozone.
It adds that “if mutual market access is lost, independent analysis indicates economic benefits from UK FS activity relocating to the EU27 will be more than offset by negative fragmentation and lost efficiency.”
The EU’s standard agreement on ‘regulatory equivalence’ in financial services would not work, they say, because that would give the European Commission the power to rescind equivalence at very short notice. Instead, they are seeking ‘enhanced equivalence’ that goes beyond what the EU already has with other countries.