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UK, EU strike tentative Brexit deal on financial services

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British Prime Minister, Theresa May, has struck a tentative deal with the EU that would give financial services companies in the United Kingdom continued access to European markets after Brexit, The Times reported on Thursday.

A woman walks past a house where “Vote Leave” boards are displayed in Redcar, north east England on June 27, 2016
Britain’s historic decision to leave the 28-nation bloc has sent shockwaves through the political and economic fabric of the nation. It has also fuelled fears of a break-up of the United Kingdom with Scotland eyeing a new independence poll, and created turmoil in the opposition Labour party where leader Jeremy Corbyn is battling an all-out revolt.
/ AFP PHOTO
British and European negotiators have reached tentative agreement on all aspects of a future partnership on services, as well as the exchange of data, the British newspaper reported, citing government sources.

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The deal would give UK companies access to European markets as long as British financial regulation remained broadly aligned with the EU’s, according to the Times.

The pound jumped, rising 0.9 per cent to as high as 1.2881 dollars.

Britain’s department for exiting the European Union (EU) did not immediately comment on the report.

London, which has been a critical artery for the flow of money around the world for centuries, is the world’s largest centre of international finance.

Meanwhile, New York is by some measures bigger, it is more centred on American markets.

Many bankers and politicians predicted after the June 2016 referendum that leaving the EU would prompt a mass exodus of jobs and business, dealing a crippling blow to London’s position in global finance.

Global banks operating in the UK have already moved some staff and re-organised some operations ahead of Britain’s departure from the EU, due on March 29.

According to The Times report, the EU will accept that the UK has “equivalent” regulations to Brussels.

UK financial services companies will be allowed to operate as they now do in Europe.

EU officials said the EU’s financial market access system known as “equivalence,” under which Brussels grants access to foreign banks and insurers, if their home rules converge with the bloc’s, is probably Britain’s best bet.

“Equivalence” has so far had limited application because, for one under existing rules, market access can be withdrawn unilaterally with only a month’s notice,’’ The Times said.

Under the new deal, it will be extended and fall under the governance of a wider trade treaty, allowing the EU and the UK to change or set new financial regulations after consulting each other beforehand, the newspaper said.

May’s principal Europe Adviser, Oliver Robbins, is continuing the negotiations in Brussels, according to the report.

With five months to go before Brexit, business leaders are demanding certainty over the kind of trade terms the divorce will deliver.

“The UK’s Financial Conduct Authority wants Britain to stay closely aligned with the EU, but without Britain’s having to copy all the bloc’s rules,’’ the Acting Director of Strategy at the FCA, Richard Monks, said.

Britain on Wednesday said there was no set date for Brexit talks to finish, backtracking from a letter by Brexit Minister, Dominic Raab, that suggested a deal on the terms of its departure could be finalised by Nov. 21. (Reuters/NAN)

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