Michel Barnier rebuffs UK's hopes for financial market access

Pedro Gonçalves
clock
Michel Barnier rebuffs UK's hopes for financial market access

The European Union has warned ministers not to "kid themselves" over the freedom which the City of London will have to operate in EU markets in a post-Brexit trade agreement.

The EU's chief Brexit negotiator, Michel Barnier, said London should be "under no illusion" on financial services as there would be "no general, global, permanent equivalence" with Britain.

"There will be no common management," Barnier told the European Parliament in Strasbourg.

I would like to take this opportunity to make it clear to certain people in the United Kingdom ... that they should not kid themselves about this"

His words came shortly after it emerged the UK would be seeking a "permanent equivalence" regime for financial services that would last for "decades to come". The document said Sajid Javid, the chancellor, would seek a full chapter on financial services in any free trade agreement, with "comprehensive, permanent equivalence decisions". 

Javid urged the EU to consider Britain's financial sector "equivalent", a reference to the bloc's system of financial market access, based on Brussels acknowledging that UK regulation is as robust as the EU's.

"This is important not only in the short term, but to establish the norms and ways of working with the EU that will endure for decades to come," Javid said in an article in City AM newspaper.

Britain left the EU last month and its large financial services sector will lose privileged access to EU customers from January 2021. Financial firms will be able to service those clients only in sub-sectors where rules are deemed "equivalent".

Barnier told the European Parliament: "I would like to take this opportunity to make it clear to certain people in the United Kingdom ... that they should not kid themselves about this."

The negotiating stance is a response to escalating concerns among UK financial services executives that the EU could easily revoke equivalence agreements after Brexit, destabilising their businesses and leaving them scrambling to continue to offer services to European clients. 

In the meantime, new blue passports to mark Brexit will be rolled out across the UK from March, the Home Office has confirmed. Immigration minister Brandon Lewis claimed that the blue passports will "symbolise our national identity" and will be "one of the most secure travel documents in the world, with a raft of new security measures to protect against fraud and forgery".

As the UK enters the next phase of Brexit negotiations the EU says it will back Spain over its territorial claims to Gibraltar by giving Madrid the power to exclude the British overseas territory from any trade deal struck with Brussels.

Boris Johnson is expected to be given a choice of handing the territory over to Spain or having it excluded from any trade agreement between the UK and EU.

A senior EU diplomat told The Observer: "They have in principle asked that the new relationship not apply to Gibraltar without the explicit consent of Spain, which will only be given if the bilateral talks with Spain and the UK over the rock are resolved."

Chief Minister of Gibraltar, Fabian Picardo said: "The guidelines published by the EU are not surprising at all. "However, frankly, this continued insistence on the exclusion of Gibraltar says a lot about the EU. We will maintain a positive attitude towards the future."

Gibraltar voted overwhelmingly to remain in the EU in the 2016 referendum, while Spain has never relinquished its sovereignty claim over the British overseas territory, which has been in British hands since 1713's Treaty of Utrecht.

 

Subscribe to International Investment's free, twice-daily, newsletter