EU shamed: Insider breaks cover to expose bloc’s dirty Brexit tricks- ‘Want to kick City!’
Brexit: Sunak outlines UK financial services sector plan
Boris Johnson’s EU trade deal does not extensively include financial services, with Brussels insisting services be covered under a separate agreement to the free trade pact. In the political declaration on future relations of the 2019 EU withdrawal agreement, both sides signed up to settling a new framework for financial service trade.
The new model would have seen both sides granting access to firms to operate in each other’s territories based on so-called “equivalence” – the determination both sides have similar rules and regulations.
However, the UK is still waiting for such status, with one member Britain’s negotiating team accusing Brussels of toying with the sector in talks.
A UK official told the Financial Times: “It became clear in June or July they were just going to ignore the equivalence process.
“They wanted to kick the City around a bit.”
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The UK has already granted equivalence status to EU finance firms in 17 areas, but Brussels has so far only given British businesses temporary equivalence status.
Last summer Britain provided more than 2,500 pages on answers to help satisfy Brussels its rules and regulations were similar to the blocs own.
However, in October the EU claimed it still needed more clarity from the UK.
Their calls for more information came despite both territories already having similar regulations as a result of the UK’s having spent 45 years in the bloc.
The sector makes up almost seven percent of UK GDP and brings in over £130billion to Britain’s economy each year.
Yet firms have been left to fend for themselves so far due to the lack of protection offered in the free trade deal.
The pact reached between the UK and the EU only mentions financial services 80 times in its 1,246-page document.
By comparison, fishing is mentioned 368 times.
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Prime Minister Boris Johnson has himself conceded his disappointment the EU trade deal did not give more certainty for financial services, saying it does “not go as far as we would like”.
The UK’s Economic Secretary John Glen is currently leading negotiations with Brussels to secure a memorandum of understanding by March.
The document issued will outline how London and Brussels expect to cooperate on future regulation to ensure firms continue to work across borders.
However, equivalence is not directly linked to the memorandum and it remains uncertain when – or if – the EU will grant such rights to British firms.
Chancellor Rishi Sunak has been quick to shrug off fears the lack of equivalence could lead to firm relocating to remain inside the single market.
He believes leaving the EU is a chance to replicate the success of the 1980s when Margaret Thatcher’s deregulation agenda helped financial services prosper.
The Chancellor said: “If you look at the history of the City stretching even further back than that, it has always constantly innovated, adapted and evolved to changing circumstances and thrived and prospered as a result.
“And I think it will continue to do that.”
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