07.12.2018
By Shanny Basar

Brexit White Paper Is “A Real Blow” For The City

The UK government has today published a white paper on the future relationship with the European Union after Brexit.

Catherine McGuinness policy chairman of the City of London Corporation, said:

“Today’s Brexit white paper is a real blow for the UK’s financial and related professional services sector. With looser trade ties to Europe, the financial and related professional services sector will be less able to create jobs, generate tax and support growth across the wider economy. It’s that simple.

The sector has been clear since the referendum: Equivalence in its current form is not fit for purpose so any “enhancements” to this regime would have to be substantial.

As the EU’s gateway to capital, the UK is a significant trading partner for the bloc. It’s in the interests of households and businesses on both sides of the Channel that an ambitious future trading relationship, covering services as well as goods, is secured. Failing to secure such a deal would put up unnecessary trade barriers and runs the risk of fragmentation of financial markets, increasing costs and reducing choice for consumers.”

Miles Celic, chief  executive of trade body TheCityUK, said,

“The overriding issue for financial and related professional services firms is the ability to continue serving customers and clients. Mutual recognition would have been the best way to achieve this. It’s therefore regrettable and frustrating that this approach has been dropped before even making it to the negotiating table. In hundreds of discussions across the EU, the industry has never come across an unanswerable technical or commercial barrier to this approach. The EU’s objections have always been political.

We are reassured that the government continues to reject the current form of equivalence. It does not meet any of the requirements for success. It is now urgent that we make rapid progress on the negotiations, both around the future relationship and on immediate issues for customers such as contract continuity.”

Simon Lewis, Chief Executive of AFME (Association for Financial Markets in Europe), said in a statement:

Simon Lewis, AFME

Simon Lewis, AFME

“We welcome today’s publication of the White Paper providing further clarity and detail on the UK government’s position. We hope that this will form the basis for negotiations to progress, recognising the importance of minimising fragmentation, maintaining financial stability and close supervisory cooperation.

“It is now crucial that the progress is made as quickly as possible. Businesses require certainty of a transition period and direction on the future trading relationship to minimise disruption to clients.”

 

Stephen Jones, chief executive of UK Finance, said: 

“Given the limited time available it is vital that both the UK and EU27 negotiators come to the table and focus on ensuring a legally enforceable agreement, delivering enhanced and expanded third country arrangements that enables meaningful cross-border market access in financial services.”

Law firm Hogan Lovells said:

“For businesses there will be a range of specific concerns and questions but the overriding impression will be the amount of work that still needs to be done. Even if these proposals can win sufficient favour in principle to enable a withdrawal agreement to be signed before 29 March 2019, it seems inevitable that many important details will remain outstanding. That will mean that many months of the “transition period” are likely to be taken up with continuing negotiations meaning that the practical window for transition could well be much shorter than 21 months. Not the ‘beginning of the end’ but perhaps the ‘end of the beginning’ of Brexit.”

The European Parliament’s Brexit Steering Group said in a statement:

“In a first reaction, it welcomed both the Statement and the White Paper by the UK Government as a step towards establishing a new relationship between the UK and the EU once the UK is no longer a Member State.

In particular, the BSG welcomed that the UK is proposing that the future EU-UK relationship take the form of an Association Agreement. Given this has been the Parliament’s position from the very beginning the BSG agrees with this approach which would place the future EU-UK relationship in all its dimensions – economic, sectoral, security, foreign policy – on a firm footing within a coherent governance structure.

The BSG reiterated that negotiating a new relationship with the UK post-Brexit is conditional on an orderly withdrawal of the UK from the EU on the basis of a Withdrawal Agreement (WA). It reconfirmed the Parliament’s position expressed in its resolutions that it will not consent to a WA, including a transition period, without a credible “back stop” provision for the Northern Ireland/Ireland border to prevent a hard border and safeguard the integrity of the single market, faithfully reflecting the commitments entered into in the Joint Report of 8 December 2017. It urged the UK Government to clarify its positions on the “back stop” so that the WA can be finalised as quickly as possible.

Other important elements of the WA, including its governance provisions, in particular a credible dispute settlement mechanism, also still need to be agreed. Moreover, regarding the implementation of the WA, the Parliament expects a positive response to its letter to Home Secretary Sajid Javid on 3 July 2018 and especially concerning the independent authority and the smooth registration of all EU citizens.

The BSG noted that negotiations on the WA and the framework for the future relationship will continue next week. It recalled its position for the closest trade and economic partnership possible while respecting among others the principles of the non-divisibility of the four freedoms, the integrity of the single market, avoiding a sector-by-sector approach and safeguarding financial stability, the preservation of the autonomy of EU decision-making, the safeguarding of the EU legal order and the balance of rights and obligations which any future EU-UK relationship will need to respect. In this framework there will be, for example, no space for outsourcing EU‘s customs competences.

The BSG stated its readiness to provide its input to the negotiation process at any time over the coming weeks and it will carry out a further assessment of the White Paper in the coming days and weeks.

 Background

In its March resolution, the European Parliament considered that an Association Agreement between the EU and the UK could provide an appropriate framework for their future relationship. MEPs insisted that the framework should include consistent governance, with a robust dispute resolution mechanism.

Parliament as a whole will have the final say on the outcome of negotiations when it votes to approve or reject the withdrawal deal, to be finalised in the autumn.

 

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