The City is braced for a flurry of parliamentary activity this years as MPs vye to shape the UK's route to Brexit.
The controversial EU Withdrawal Bill returns to the House of Commons on 16 January, but a key test for the government will come when the legislation is passed on to the House of Lords. A revolt is brewing, with Liberal Democrat leader Sir Vince Cable saying his party’s 100 peers will join forces with Labour’s anti-Brexit peers.
Businesses will hear more about the future of the UK workforce when the Home Office puts forward its bill on immigration. The government has asked the Migration Advisory Committee to look at post-Brexit options for immigration, with a deadline of September 2018, so new legislation is expected late in the year.
Meanwhile, chancellor Philip Hammond’s Customs Bill will be debated next week, while MPs will also tackle Liam Fox’s Trade Bill.
Away from Westminster, crunch talks resume with the EU. First, the UK must agree a transition agreement, which both sides are aiming to complete by the end of March. The key decision days will be the 22 March and 23 March, when the leaders of the EU27 meet to discuss the progress of talks and other international affairs.
Businesses will be hoping the decision is not put off until the next meeting on 28 June. The key battle will be whether the UK is allowed to sign new trade deals during a two-year transition, and whether the UK will follow EU laws created during the period.
The final set of discussions will be over trade and the future relationship between the UK and EU.
Top negotiator Michel Barnier is insisting there can be no special market access for financial services, an assertion disputed by Brexit secretary David Davis and industry representatives in the UK. With trade talks taking place in the summer, the EU27 could sign off a deal when it meets on 18 October, but, equally, the decision could be pushed back to 13 December.
Events elsewhere in Europe have not had a huge impact on Brexit talks so far, but politicians will be looking out for how coalition talks in Germany progress, and the outcome of the Italian general election in March.
In Germany, the main parties do not hugely differ on attitudes to Brexit. In Italy, however, the eurosceptic 5star movement is ahead in the polls so this could well be a pivotal moment for the EU’s future more generally, although analysts are not expecting an outright winner.
What does the City want?
Firms in the City and beyond will be looking for:
- a commitment to a transition period maintaining the UK's relationship with the EU as it is, by the end of the first quarter.
- a free trade deal which encompasses financial services, and prioritises alignment with EU regulations over deregulation.
- an immigration system which provides clarity for EU workers.
- clarity on the UK's regulatory relationship with the EU - ideally with continuing participation in the EU's regulatory agencies, and recognition of professional qualifications.
- action on barriers to trade at UK ports.