A senior city figure has warned that the UK risks being stuck with a “token minimalist” deal on financial services as part of the post-Brexit agreement with the EU in October.
The source said that while services are likely to be referenced in the final deal, it will be “just a slightly uninspiring, lowest-common-denominator” inclusion that will result in “dramatically less” access compared to the levels we current have.
“They will say it’s the most comprehensive deal the EU has ever done on services with any third country and that will be true, but it will not only be less than we have through the Single Market, it will be dramatically less,” he said.
Despite government figures such as Brexit secretary David Davis, chancellor Philip Hammond and Prime Minister Theresa May pressing the case for the City to get a deal, the barriers put up by either side make it difficult to reach a compromise.
The EU is pushing for equivalence, which would leave the UK as a rule-taker. Both the City and Westminster have displayed favour towards multi-regulatory alignment, an “enhance” approach that would still give the EU ultimate control to unilaterally withdraw access and would leave the UK vulnerable.
Davis recently told the Wall Street Journal CEO Council the team was looking to “develop a chapter” on services within the deal, which will be voted on by UK and EU parliaments.
A government spokesperson further commented: “The UK government has been clear in seeking a comprehensive and ambitious deal with the EU, which should cover financial services and protect the role of the City of London as a top global financial centre.”
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