City of London eyes its own Brexit positioning paper after David Davis lays out customs plans

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City sources are expecting the government to publish a positioning paper addressing financial services in the coming weeks (Source: Getty)

Business groups have welcomed Brexit secretary David Davis’ proposals for the UK’s future customs relationship with the EU, including his pursuit of a transition arrangement.

The City, meanwhile, is waiting with bated breath for further clarification on how the government intends to handle the financial services sector. Banks and other financial institutions have been lobbying hard for a transitional period of their own and for more detail on the government’s plans for the sector post-Brexit.

City sources have told City A.M. they are expecting a Department for Exiting the European Union (DexEU) paper on services, including financial services, in the coming weeks.

Read more: Davis lays cards on the table: Brexit secretary sets out customs vision

The government’s customs proposals, outlined by Davis in an article for City A.M., include a plan for an interim period in which the UK would remain part of a “temporary customs union” with the EU, remaining free to “negotiate” new trade deals at the same time.

The paper was widely welcomed by business groups. “The commitment from government to explore a customs union for the interim period is a critical first step forward,” said Josh Hardie, CBI deputy director general. “This clarity is vital for businesses making long-term investment decisions today.”

Allie Renison, head of EU and trade policy at the Institute of Directors, said it was a “hugely positive step” for the government to lay out its customs objectives.

However, other figures were concerned that the government has so far remained silent on financial services.

Miles Celic, chief executive of TheCityUK, said: “Alongside a transitional customs arrangement, we also want to see urgent agreement by the UK and the EU27 on a broader transitional arrangement which includes services.”

Anthony Belchambers of the Legatum Financial Services Forum told City A.M.: “I would hope that [the City] would be treated in a similar way, subject to the same degree of extension.”

Andrew Hood, a former legal adviser to David Cameron who now works for law firm Dechert, said: “[The paper] focuses only on trade in goods and the government needs to set out how it aims to provide reassurance on the continued trade in services and how businesses will be able to access the right skills in the years ahead.”

DexEU has not confirmed precisely when an expected paper on financial services will be published.

Meanwhile, the European Commission yesterday pushed back against parts of the UK’s customs proposals, saying that future agreements will be addressed only when “sufficient progress” has been made on exit terms.

The commission also played down the chances of a “frictionless” trade agreement, as suggested by Davis, after the UK leaves the customs union.

Read more: There’s still all to play for in the Brexit debate