Monday 13 July 2020 6:18 pm

Brexit: UK completes assessments for City of London to retain EU access

The UK has now submitted all paperwork necessary for the City of London to potentially retain access to the EU, after missing the original deadline two weeks ago.

The 28 assessments were due on 1 July, however Downing Street previously blamed the EU for missing the deadline as they received much of the paperwork, which was more than 1000 pages, later than promised.

Brussels must use these documents to assess whether it grants the City of London access to lucrative EU markets after the post-Brexit transition period ends on 31 December.

The EU has the power to unilaterally grant access to financial services firms based on whether UK regulations are similar to their own – known as equivalence.

EU chief negotiator Michel Barnier recently told a House of Lords committee that Brussels was “ready to grant” equivalence status to the financial services industry, boosting hopes of a smooth Brexit transition for the Square Mile.

Brussels also announced last week that it would continue to allow the EU financial services industry to use the UK’s clearing houses on a “time limited basis”.

The UK has also performed similar assessments to judge whether to allow EU firms to operate in the UK, with a Number 10 official saying today that it had completed all checks.

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The official also confirmed that “the UK has now returned all of the questionnaires”.

A senior EU aide said the European Commission would now “assess it and have further discussions on it”, before revealing any decisions on equivalence.

The equivalence decision comes as a part of a wider range of disagreements in Brexit trade talks.

Negotiations are at a stalemate after months of talks, with little movement on key areas of EU access to UK fishing waters and business competition policy.

City A.M. reported in May that the equivalence assessment for the financial sector could be used as a bargaining chip in Brexit talks, with the EU using it as a tool to extract concessions in other areas from the UK.

Much is riding on the City of London retaining access to the EU as almost half of all debt and equity issuance for non-financial Eurozone firms between 2012 and 2018 came from banks based in London.