Professional services have not received the attention they deserve in the run-up to the Brexit negotiations, the chair of a House of Lords committee has warned, and that could undermine any deal secured for the financial sector.
The House of Lords EU Internal Market Sub-Committee research paper argues the government must fight for a comprehensive free-trade agreement for non-financial services sectors – including aviation, broadcasting and telecoms as well as professional services like law and accountancy – if the country hoped to continue with business as usual on day one of Brexit.
"I don't think enough weight has yet been given to these sectors, compared with the City, which everybody says is a top priority, these sectors have received less," Lord Whitty, chair of the committee, told City A.M.
He added that, thanks to the City's well-balanced offering of professional services firms to compliment the financial industry, failing to secure a deal for these sectors would ultimately "undermine" any agreement struck for the financial sector.
In particular, the peers caution negotiators must ensure qualifications are still mutually recognised across Europe once the UK has departed from the EU.
"Unless the deal has mutual recognition of qualifications, then the ability of London-based law firms and legal employees of City companies to appear in the courts and do business in the courts is limited," said Whitty.
The Lords Committee also warned the government will need to be ambitious in seeking out suitable deals, as few trade deals in the past have effectively covered services so comprehensively, and that failing to secure an agreement would leave these industries in an unacceptable situation.
The news comes just two days after Prime Minister Theresa May revealed Article 50 will be triggered on 29 March. Michel Barnier, the man who will be leading the discussions for the European Commission, has previously said he would like negotiations to be done and dusted within 18 months of the UK handing in its formal notice.
Whitty is sceptical the necessary deals for the services sectors could be nailed down within a year and a half. He warns, because of the "magnitude" of the agreement needed, it might take a number of years to sort out and therefore transition periods will be needed.
"Getting it all done in 18 months seems a tall order," he added.
The Lords Committee report notes the UK is the second-largest exporter of services worldwide, and the industries covered by the research accounted for 32 per cent of all the country's exports in 2015.
A government spokesperson said: "The Prime Minister has been clear that we will pursue a bold and ambitious free trade agreement with the European Union as a priority – it should allow for the freest possible trade in services, as well as goods, between Britain and the EU."