The UK government will next week begin urgent talks to try and reach an agreement by March on the future of the UK’s access to EU financial markets.
City minister John Glen and senior Treasury civil servant Katharine Braddick will lead the talks for the UK.
Boris Johnson’s Brexit trade deal does not include an EU-wide arrangement for financial services, with UK firms instead having to negotiate a patchwork of individual EU nations’ regulations.
This has forced major UK-based banks to move assets and jobs to EU financial capitals to avoid disruption.
Accounting firm EY estimates that more than £1 trillion of assets have been moved from London to the EU since 2016 as a result of Brexit.
The trade deal outlined plans to set up a dialogue between the UK and EU to discuss future financial services arrangements, with March set as a rough deadline.
The Mail on Sunday reports that Braddick and Glen will meet with financial services lobby groups such as the The CityUK and UK Finance this week as it tries to secure better access to the EU.
They will also begin dialogue with the EU to forge a “memorandum of understanding” about future financial services access.
The only way the UK financial services industry can maintain its pre-Brexit access to the EU is if Brussels grants regulatory equivalence.
This is a classification that will only be given if Brussels deems that the UK will stay roughly within the EU’s regulatory orbit for financial services.
The City of London exported £25bn of services to the EU in 2019, which is almost half the total amount of financial services exported by the UK that year.
Former Prime Minister Theresa May expressed her disappointment earlier this week that Johnson’s deal included no financial services arrangement.
“In 2018 in Mansion house, I said that we wanted to work to get a financial services deal in the future treaty arrangement and that it would be truly groundbreaking,” she said.
“It would have been, but sadly it has not been achieved. We have a deal in trade which benefits the EU, but not a deal in services that would have benefited the UK.
“The arrangement treaty is clear that future negotiation on these points is possible and I hope the government will go to the negotiations with alacrity and vigour, particularly on financial services.”