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City seeks Swiss-style trade deal for EU access City seeks Swiss-style trade deal for EU access
(about 5 hours later)
The City of London is working up plans to secure a deal that will allow its different sectors to keep trading with Europe after Britain leaves the EU.The City of London is working up plans to secure a deal that will allow its different sectors to keep trading with Europe after Britain leaves the EU.
It is understood representatives from the UK’s financial sector will next month attend a meeting of the cabinet committee for Brexit, led by the prime minister, to present their initial policy ideas. Senior officials are keen to ensure the UK maintains full access to the European Union through “passporting” deals that require the imposition of regulations at the same level as those in the EU. The deal would allow trade to continue from London through what will become the 27-nation bloc.
The City will seek a deal similar to the one struck by Switzerland, effectively abandoning hopes of the full access to the EU single market enjoyed by Norway, according to a report in the Financial Times. “The banking sector unequivocally wants to maintain the current level of full access to the EU market, to ensure that businesses and customers across Europe can still be served by UK-based banks,” said Anthony Browne, the chief executive of the British Bankers’ Association.
The report suggests City officials believe it would be too difficult – both politically and practically - to secure a Norway-style deal. Norway has access to the single market and therefore must accept the free movement of people, but because it is not a member of the EU, it does not have a say in how the rules are set. He issued his remarks after telling the Financial Times that a deal like the one adopted by Switzerland – whose life insurance business has access to the single market – could be a route to follow, although the model would be improved on.
In Switzerland, some sectors including life insurance have full two-way access to the single market in “passporting” deals that require sectors to impose regulations at the same level as the EU. The practicalities of achieving access to the single market are still to be hammered out and the process could take years. A number of City bodies are working on ideas for the government to pursue, including the BBA, CityUK – another lobby group – and a panel of bank chairs, led by Shriti Vadera, chairwoman of the UK arm of Santander.
The Swiss banking sector does not have such a deal, and therefore much of its EU business is channelled through London subsidiaries.
The City is hoping to use to the Swiss model but improve on it, according to the FT. While the Financial Times reported that City officials had given up on retaining universal access to the single market, Chris Cummings, chief executive of CityUK, said discussions were still under way.
Anthony Browne, chief executive of the British Bankers’ Association, told the newspaper: “There needs to be a bilateral deal providing as full two-way market access as possible. “At this stage, it is too early to be talking about conclusions for the Brexit negotiations. The financial and related professional services industry is working hard to prepare a detailed assessment of the priorities that matter most to our customers and clients so that we can help ministers and officials best prepare for the upcoming negotiations,” said Cummings.
“Both sides have an interest in making this work, as it is not in the interests of the other EU countries to be cut off from their main financial centre, especially at a time they are all seeking to boost economic growth.” “Mutually beneficial trade and investment links that allow the UK to trade freely with the EU and vice-versa and continued access to skilled talent from the EU and the rest of the world remain very important for our industry. Our job is to ensure policymakers appreciate the importance of financial and related professional services to the UK economy.”
An arrangement like the one secured by Norway, which has access to the single market and therefore must accept the free movement of people, is thought to be the least likely outcome.