EU leaders have repeatedly warned that the four freedoms of the 28 member nation bloc, Freedom of people, of goods, of services and capital, cannot be cherry picked.
In a significant development, Britain’s famed finance industry has given up its demand of getting access to EU’s single market bloc. It is now instead pushing for a more limited trade deal, which could potentially exclude a few financial products.
Asset managers, bankers and insurers have reportedly come to the conclusion that getting access to complete passporting rights is an unrealistic dream after Brexit. They are now channeling their efforts into getting access to a limited number of services in EU’s single market.
Britain’s most powerful financial lobby group, TheCityUK, has listed seventeen points in a 2-page document which calls for a limited access to EU’s single bloc market, hoping that the EU and Britain will now accept each other’s rules.
This potential backdoor entry into EU’s single bloc market has the option to keep cross-border trading of stocks and bonds, including the sale of certain other financial products.
Britain’s referendum has gambled away one of its most prized assets – its financial centre, which is the biggest in Europe. Significantly, it is also Britain’s largest export sector and its biggest source of corporate tax revenue.
Estimates suggest that the country’s financial industry could lose up to $46.07 billion (38 billion pounds) in revenue in case of a “hard Brexit”.
In a deft maneuver, the new proposals mark the realisation that since the possibility of full passporting rights are low, the odds of getting partial access, which could potentially lead to a full access in the long run, are much higher.
“I am confident that this represents in broad shape the key priorities for the industry,” said Miles Celic, TheCityUK’s CEO.
He went on to add, “There are a multiple number of documents out there of stuff at significant length. So there was a sense among our membership to filter down what the key asks were into a single place.”
This partial deal is likely to offset the heightened risk of a hard Brexit.
TheCityUK document is Britain’s first attempt to unify the demands of the finance industry after months of conflicting lobbying and comes just 2 months before Britain’s planned divorce with the EU.
EU leaders have however repeatedly said that access to its single market is defined in the bloc’s charter defined by four freedoms – Freedom of people, of goods, services and capital. These cannot be cherry picked.
Earlier, British Prime Minister Theresa May had said she was not interested in Britain keeping “bits” of its EU membership, thus signaling that the country could leave EU’s single market.
However, TheCityUK documents states, Britain must seek “access to the widest possible range of financial and related professional products and services,” thus implying that a few sectors could potentially lose access to EU’s single bloc market, under any final deal.
TheCityUK has proposed for a “clear and upfront transitional arrangements” so as to bridge the gap between Britain’s divorce with the EU and the start of the bespoken deal. It has however not provided any specific timeframe.
Trade experts have warned that a bespoke deal could take, upto a decade, to be hammered out.
Brexit supporters want a quick break with the bloc.