Tuesday 8 September 2020 4:03 pm

City of London slams government plans to override EU deal

The City of London Corporation has sharply criticised the government’s plans to override some parts of the EU withdrawal agreement, warning it could “seriously damage” the UK’s relationship with its biggest trading partner.

Speaking at a webinar, the Corporation’s head of policy Catherine McGuinness also said the government appeared to have forgotten about the financial services sector during Brexit talks.

Read more: Brexit: Top UK civil service lawyer quits over Downing Street row

It comes after the Financial Times reported that the government planned to row back on parts of the withdrawal agreement struck with the EU in the autumn of 2019. The FT said ministers would alter certain rules about Northern Irish custom checks and state aid.

Today Northern Ireland secretary Brandon Lewis admitted the government planned to “break international law in a very specific and limited way” by altering the agreement.

McGuinness, a powerful voice in the City, today said: “The devil will be in the detail.” But she added: “It is disappointing to see the tension that currently seems to sit over the negotiations.” 

She said: “I think if we were to see a significant reneging from the withdrawal agreement, or if we were to see a no-deal end to the transition period, that would seriously damage both our ability to build a strong positive relationship with the EU, at least in the short term.” 

“The rest of the world is watching. The world is looking at how we treat our closest trading partner to assess how we might approach other trading relationships.”

City ‘thrown under a bus’

McGuinness also expressed concern that the UK’s financial services sector had been forgotten during the latest Brexit talks.

“I said some time ago that we’d been thrown under a bus. I do feel the bus has driven off and we’re definitely not sitting on it,” she said.

A key part of any agreement over financial services is “equivalence”. That is the system whereby the EU would deem Britain’s rules to be aligned, and grant the UK access.

Yet a deadline for deciding on equivalence was missed at the end of June. The EU warned any decision could take until next year, because coronavirus had put its own rules in flux.

McGuinness today said the City of London Corporation, which acts as a representative for the financial services sector, was “disappointed” by the delay.

“But we would also urge our own government to put inward equivalence decisions to the fore too,” she said.

Back in February, Prime Minister sought to reassure the City about Brexit. That was after financial firms were spooked by the government’s decision not to align with the bloc’s rules.

Read more: Brexit: Boris Johnson plans to breach withdrawal agreement to put trade talks in peril

Yet many in the City feel more attention has been paid to much smaller sectors such as fishing. 

McGuinness said: “It’s much easier to relate to fish than financial services. But it is disappointing that the importance of this sector to our economy isn’t understood.”