Monday 22 June 2020 3:50 pm

German banks press EU for action on Brexit equivalence

The Association of German Banks (BDB) has called for the EU to prioritise equivalence rules in discussions surrounding the UK’s upcoming exit, arguing they are vital for achieving market and financial stability on both sides.

“Clarity regarding future market access arrangements should be provided at the earliest possible date,” the BDB said in a position paper.

It also called for a comprehensive free trade agreement to be established, alongside strengthening “the EU internal market and market infrastructure”.

Britain left the EU on 31 January, but talks on future relations have so far made little progress. The UK wants a trade deal with no tariffs or quotas and few strings, while the EU wants a closer alliance that would also cover security, climate and transport, and strongly aligned regulations.

A spokesperson for UK Finance, a trade body representing British financial institutions, said: “The Association of German Banks is right to call for full and reciprocal financial services access to be established as early as possible in the EU-UK trade deal.

“Strengthening the arrangements for future cross-border trade in financial services, including equivalence mechanisms, would provide stability and certainty for businesses in the EU and UK. These arrangements do not need to be contained solely within a free trade agreement and can build on the longstanding regulatory relationships and supervisory cooperation that already exist.”

Prime Minister Boris Johnson and EU leaders say a deal is achievable, but both sides say time is running out and the prospect of no-deal remains.

A transition period during which Britain remains part of the EU’s customs union and single market expires at the end of the year and the PM has ruled out extending it.

Meanwhile diplomats and officials have said this week that the EU could soften its demands in trade talks that Britain follow its state aid rules.

The EU says they are essential to open its single market to British products without the risk of being undercut by laxer standards. However Westminster rejects being bound by EU state aid rules since escaping the bloc’s laws and jurisdiction was a major Brexit promise to voters.

“A possible ‘landing zone’ could be taking a snapshot at the end of the transition period to define common standards from which the sides would not slip,” a diplomat told Reuters.