Apr 05 2018
British negotiators are reportedly preparing to push for the kind of Brexit favoured by the UK's financial services sector, despite Brussels having already rebuffed a similar proposal.
Chancellor Philip Hammond could make a speech as early as next week detailing a mutual recognition system to regulate financial services after Brexit, which will allow UK banks to maintain access to the EU, The Financial Times has reported.
Such a plan would mean the UK and EU would recognise each other's regulatory and supervisory authorities which would align their rules post-Brexit. The system would include a dispute resolution mechanism to be used in case either side was felt to be breaking the spirit of the agreement.
This is the option favoured by UK banks, as well as by Bank of England Governor Mark Carney.
The FT said it spoke to three senior figures briefed on cabinet Brexit discussions who said the government will back the plan.
One source told the newspaper: "They are going down the route of mutual recognition," with another describing it as a "dynamic reciprocal mutual recognition model".
Miles Celic, chief executive of lobbying group TheCityUK said: "This has been our plan A, plan B and plan C for about 12 months or more."
In January, European Commission officials dismissed a proposal from the City of London for a post-Brexit free trade deal on financial services. The Commission said that the UK must not be able to pick which parts of the single market it can retain.
Any overtures made by Hammond towards a similar deal next week will likely face fresh opposition.
The FT notes that the other 27 EU member states may resist such a plan as they are aware of the City's importance to UK's position. As such, it predicts that any deal would come later on in negotiations.
About €6tn (£5.33tn, $7.5tn), or 37%, of Europe's financial assets are managed in London, which is almost twice the amount of its nearest rival, Paris.Archives →