City seeks trade pact to mirror current EU rules to save jobs post Brexit: report
The UK’s financial sector is hoping that the government will support an “ambitious” trade pact between Britain and the European Union that will replicate much of the current EU/UK financial services industry rules, in a bid to save jobs.
The International Regulatory Strategy Group (IRSG) – set up to try and spur the UK government into action – is trying to prevent a costly shift of jobs and business to the continent once the country leaves the EU bloc, according to a draft report seen by news agency Reuters.
Unless Britain negotiates new trading relations with the EU, banks, insurers and fund managers in Britain could be locked out of the bloc’s markets when it leaves the EU in March 2019.
The Reuters report said that the IRSG draft report, to be submitted to the British government in September, that such a trade pact would allow UK firms to operate in the EU without the cost of having a local licence.
“The proposals in the report are intended to achieve a level of mutual access for EU and UK firms, which is as close as possible to the current levels of access that exist for such firms within the EU framework,” the report said.
The report admitted negotiating such a pact could be “challenging” as EU states are likely to oppose the deal, given the financial incentives of attracting business away from the UK.
As reported, other EU financial centres such as Paris and Frankfurt have been vying to attract London’s financial businesses since the Brexit vote, with some firms already committed to moving infrastructure and staff.
Currently, banks authorised in London can “passport” or offer their services to customers across the EU without the need for a licence in each country, but this will end when Britain leaves, forcing the country to agree new trading terms.
Initially, the financial sector called for continued full passporting rights after Brexit, which is being negotiated over two years since Britain triggered the process in March, following a referendum vote in June last year.
The new proposals mark a departure from that stance, that could be seen as a recognition that the EU is likely to rule out future ‘passporting’.
As reported, the UK government ruled out special support for the City, despite its £71.4bn input to the country’s GDP (11.8% of the country’s total) and repeated despite requests from City delegations for emergency support.