FT: EU softens opposition to May’s post-Brexit plan for London Financial services
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The FT reports that the EU’s chief negotiator has softened his opposition to Theresa May’s post-Brexit plan for London’s financial services industry after UK negotiators acknowledged Brussels would have ultimate control over the City’s access to European markets. London’s future as a global financial centre is tied to its ability to serve as a gateway to Europe for international banks, and UK negotiators had originally hoped they would be able to secure a special arrangement with Brussels to retain access even as Britain began to set up its own regulatory regime.
Michel Barnier had rejected the British prime minister’s new proposals, agreed with her cabinet earlier this month, because he believed she was suggesting an independent arbiter should decide whether UK regulations were sufficiently close to the EU’s to maintain market access — robbing the EU of its own “decision making autonomy”. But last week, UK negotiators told Mr Barnier’s team that her proposed arbitration system would not cover financial services. British officials insist the new guidance to Mr Barnier is not a change from the original plan, signed off by the cabinet at Chequers in early July, arguing Brussels had misinterpreted two different sections of Mrs May’s white paper. But the acknowledgment also highlights that Britain is seeking a more orthodox relationship with the EU than some in the City and Bank of England advocated.
Mrs May’s model would see London treated like New York, Singapore and other “third country” financial centres by Brussels, which must certify that rival regulatory systems have “equivalence” with the EU rule book. London now accepts that Brussels can ultimately decide whether UK financial services rules are equivalent to its own, with no further right of appeal — a stance that in effect gives the EU veto power over some UK financial reforms if it wants to retain access to the European market.
