A senior minister has refused to rule out the prospect of the UK’s financial services industry losing access to EU markets over a row with Brussels over fishing policy.
Environment secretary George Eustice at today’s press briefing said the government would not “get into saying you have to sacrifice one industry in order to give a leg up to another” as Brexit trade talks continue to stall over EU access to UK waters and competition regulations.
The UK and EU finished the third round of Brexit trade talks on Friday, with both sides saying there had been little progress made.
Brussels is demanding to maintain the same fishing access to British waters for its member states as when the UK was in the EU.
The EU is also demanding the UK signs up to a so-called level playing field of regulations to ensure British businesses do not have a long-term competitive advantage.
In return, the UK would be able to trade with the EU on a zero-tariff basis.
However, UK chief negotiator David Frost has said the position of the EU on these two areas is not tenable.
UK officials have said they would walk away from negotiations if no movement is made on these issues by next month and today Cabinet Office minister Michael Gove said Brussels needed to be more flexible if a deal is to be struck.
If no deal is ratified by 31 December, the UK will leave the customs union and single market and immediately experience barriers to trade with EU nations.
Eustice was asked today at the daily press briefing if it was right that the Square Mile, which makes up 7 per cent of UK GDP, could lose EU access due largely to a dispute around the fishing industry, which makes up 0.1 per cent to UK GDP.
“I think in this approach it is important to be clear about your priorities and one of ours is to become an independent coastal state in control of our own waters, managing and controlling access to our waters,” he said.
“I think it’s not something to get into saying you have to sacrifice one industry in order to give a leg up to another – that’s not the way to approach this negotiation.
“The way to approach it is to stand up to our interests as an independent country and that’s the approach we are taking.”
Brussels only grants access to its markets if they agree to an equivalence regime with its trading partner.
This means the country seeking a trade deal must set similar financial services regulations as the EU.
It is crucial the City of London retains access to the EU as almost half of all debt and equity issuance for non-financial Eurozone firms between 2012 and 2018 came from London-based banks.
A senior EU official told City A.M. last week that the Square Mile’s access to EU markets could be used as a bargaining chip in Brexit trade negotiations.
This saw the UK negotiating team hit back by accusing Brussels of “politicising” the City of London.