Leaders of UK financial services will be watching Westminster and Brussels movements closely, as the next phase of Brexit negotiations begins in which Britain and the EU must decide their future trade relationship.
Speaking today in Greenwich PM Boris Johnson vowed that Britain would not follow any EU alignment post its 2020 transition period, triggering fears that the government will freeze financial services out of the negotiation phase.
In his speech, Johnson confirmed the government’s anticipated stance on pursuing a ‘Canada style deal’, in which Britain and the EU would reciprocate tariff free trade on manufacturing but maintaining no equivalence for the financial services sector.
“We have made our choice – we want a free trade agreement, similar to Canada’s but in the very unlikely event that we do not succeed, then our trade will have to be based on our existing Withdrawal Agreement with the EU”, PM Johnson detailed addressing Greenwich business audiences.
Addressing the needs of Britain’s financial services, PM Johnson detailed that Britain would pursue a purely “technical” assessment on equivalence regimes, in which a mechanism are needed to discuss pending equivalence decision.
Despite the government’s optimism in securing a comprehensive arrangement, UK business leaders have urged the government to make financial services the top priority in Britain’s withdrawal negotiations.
UK and European banks have previously warned the government that if Britain does not get equivalence, the government will lose valuable tax revenue.
At present, the EU bloc is the biggest customer for Britain’s financial services exports, worth about £26 billion per year based on current status of unfettered access.
Meanwhile, Michel Barnier EU Chief Brexit Negotiator pointed towards trade-offs and concessions but warned business leaders that the UK’s access to European Union markets would be dependent on the overall trade talks between both parties.
Given a 11-month period in which to negotiate trade terms, Barnier urged cooperation with Britain on financial services but stressed that would need to preserve the EU’s autonomy.
As early posturing takes shape between negotiating parties, UK business seeks clarity of the legal position of the nation’s biggest tax contributing sector, and whether it becomes the biggest pawn in another year of Brexit madness.
