Even though a post-Brexit deal on trade has been agreed between the United Kingdom and the European Union to govern trade relationship between the two trading partners, a decision on granting access to the bloc’s financial market to British firms is yet to be taken by the EU, said reports quoting information from a European Commission official.
Britain’s very large and influential finance sector was not included in the last minute landmark trade deal as agreed on Thursday even though it includes post-Brexit rules and regulations for industries such as fishing and agriculture.
The British finance industry is hopeful that the trade agreement will create the path for companies in Britain’s finance industry to gain more access to the EU market. However indications from the EU point out the it is in no rush to grant such access, according to reports.
Starting from January 1, only two financial activities will be allowed in the EU financial markets by British companies, known as “equivalence”. The last day of the transition period for the UK in the EU is December 31.
But if the EU does not allow any further access to its financial markets for the British financial industry, there could be disruption in markets, the Bank of England has warned.
The EU wanted a “series of further clarifications” on how the UK will diverge from EU rules after December 31, the executive of the EU said just minutes after Britain and the EU hailed their agreement on trade.
“For these reasons, the Commission cannot finalise its assessment of the UK’s equivalence in the 28 areas (under discussion) and thus will not take decisions at this point in time. The assessments will therefore continue,” the official said, according to reports.
No special treatment has been conceded for now in the trade agreement for the City of London finance hub which consequently puts it at par with its arch rival New York 3,500 miles away. According to reports, this is potentially because the EU is trying to reduce its reliance on the financial services of the UK.
The reports quoting EU officials said that financial services have been referred to in the trade deal in the same way as the bloc’s other trade agreements.
Britain said that, going forward, there will be further discussions by both sides on how to go about on equivalence even though there was no commitment5 on the issue given by Britain.
Attempts to come to a memorandum of understanding on regulatory cooperation in financial services by March next year will also be made by the two sides. Such cooperation already exists for countries such as Canada and the United States.
“There’s some good language about equivalence for financial services, perhaps not as much as we would have liked, but it is nonetheless going to enable our dynamic City of London get on an prosper, as never before,” said British Prime Minister Boris Johnson.
“We hope it (the trade deal) can lay the foundations for a collaborative future partnership as independent partners,” said City of London leader Catherine McGuinness.
(Adapted from FirestPost.com)