BRUSSELS ¨C The U.K. now sees its banks having a similar relationship with the European Union after leaving the bloc as Japanese ones do.
The latest U.K. paper published Monday confirms the government wants a form of ¡°equivalence¡± on financial services ¡ª where the EU recognizes that rules are as strict as its own ¡ª but a more generous version of it than other non-EU countries enjoy. It cites the EU¡¯s pact with Japan as a precedent for a deal because it includes a commitment to take into account the impact of each other¡¯s decisions, as well as regulatory dialogue between the two sides.
The document, essentially the details of the skeleton proposal in Prime Minister Theresa May¡¯s ¡°white paper¡± last month, confirms the government has scaled back its initial ambition for British financial institutions to keep the same sort of so-called passporting access to the EU¡¯s single market as they do now.
Governments in the EU have differing views on how they should do business with British financial firms after Brexit. A Luxembourg-led group wants to give U.K. banks easier access to European markets, but other countries ¡ª including France ¡ª take a harder line and want the U.K. to be treated no differently from other nations outside the bloc, such as the U.S.
The U.K. is chiefly concerned about the EU¡¯s ability to withdraw equivalence rights at short notice and with no consultation. The government argues in the document that while it doesn¡¯t want to undermine the EU¡¯s ¡°autonomy¡± on decision-making, that shouldn¡¯t prevent either side from making ¡°commitments today about how we will approach our respective judgments¡± on equivalence.
The government also calls for both sides to agree ¡°sensible timetables for winding down activity and avoiding retaliation.¡±
A deal on financial services is part of the second stage of Brexit negotiations that will be struck only if there¡¯s an agreement on issues connected to the U.K.¡¯s withdrawal. A key sticking point in those negotiations is how to prevent the reemergence of a hard border between Northern Ireland and Ireland, which will become Britain¡¯s frontier with the EU.
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