Connect with us

Brexit

The City and #Brexit - What changes and when

Published

on

Britain leaves the European Union at 23h GMT on Friday (31 January) but has yet to negotiate a deal on future trading relations with the bloc, writes Huw Jones.

The EU is Britain’s biggest market for financial services, worth about 26 billion pounds a year in exports. That level of business has helped to keep London as one of the world’s biggest financial centres and made the financial industry Britain’s most important tax-raising sector.

The following are details on what will happen to Britain’s financial sector after Brexit.

What changes on 31 January?

Effectively, nothing. There will be a business-as-usual transition period until the end of 2020, meaning that investors in Britain and the EU will see no change in services on Monday, 3 February.

All EU financial rules will still be applicable in Britain until the end of December.

Banks, asset managers and insurers in Britain will continue to have full, unfettered access to investors in the bloc during that period.

Next stop, JUne

Britain and the EU are set to begin talks on a trade deal that would take effect from January 2021.

Access to each other’s financial services markets will come under the so-called equivalence regime in which each side decides if the other’s rules for financial stability and investor protection are sufficiently aligned with its own to grant access.

The EU and UK have agreed to complete the technical assessments for equivalence by the end of June.

UK regulators have said that Britain is the most equivalent country in the world, but the EU has made it clear that actual access will hinge on trade-offs in a broader deal that cuts across all economic sectors.

Without equivalence, EU investors will probably have to stop using London-based platforms for trading euro-denominated shares, while EU companies would have to use banks inside the bloc to issue bonds.

Asset managers in Britain, meanwhile, may not be allowed to continue running funds domiciled in the EU without equivalence.

Even with equivalence, which falls far short of the unfettered access from the so-called ‘passporting’ system currently in operation, there will be only patchy and limited direct access from Britain. For example, it does not cover basic banking or insurance broking.

Bulking up

Financial firms in Britain have opened more than 300 subsidiaries in the EU to avoid disruption to business in the event of any glitches, such as delays in obtaining equivalence, and will face pressure from EU regulators to keep bulking up.

Consultant EY estimates that 7,000 jobs are moving from Britain to staff these satellite operations, though bankers say this could rise over the course of the year if it appears there will be no equivalence agreements in place by December.

No bonfire of regulations

Leaving the EU means that Britain will be responsible for writing financial rules that hitherto came from the EU.

But the financial sector has said it does not want a “bonfire of regulations” that could jeopardize equivalence and many rules that already follow globally agreed principles.

Instead, the sector is asking UK regulators to have a formal remit to avoid new rules that put London at a disadvantage to New York or Frankfurt.

Banks are also pressing the UK government to ease taxes and levies on the sector while also calling for an immigration system that will allow continued recruitment of skilled employees from across the world.

Brexit

UK tells EU on Northern Ireland: Be responsible, be reasonable

Published

on

By

Britain's Trade Minister Liz Truss walks after the ceremony of State Opening of Parliament at the Palace of Westminster, amid the coronavirus disease (COVID-19) restrictions, in London, Britain, May 11, 2021. REUTERS/John Sibley

Britain's trade minister on Wednesday (16 June) called on the European Union to be responsible and reasonable in a row over the implementation of Northern Ireland Protocol of the Brexit divorce deal, write Guy Faulconbridge and Michael Holden, Reuters.

"We need the EU to be pragmatic about the checks that are undertaken and that was always the way the protocol was drafted," International Trade Secretary Liz Truss (pictured) told Sky News.

"It requires compromise between the parties, and the EU need to be reasonable," Truss said.

Continue Reading

Brexit

Brexit deal risks undermining Northern Ireland peace, says UK's Frost

Published

on

By

The historic US-brokered 1998 Irish peace agreement has been put at risk by the implementation of the Brexit divorce deal in the British province of Northern Ireland, Prime Minister Boris Johnson's top Brexit negotiator said on Wednesday (16 June), writes Guy Faulconbridge.

The United States has expressed grave concern that a dispute between London and Brussels over the implementation of the 2020 Brexit treaty could undermine the Good Friday accord, which effectively ended three decades of violence.

After the United Kingdom exited the bloc's orbit on 1 January, Johnson has unilaterally delayed the implementation of some provisions of the deal's Northern Ireland Protocol and his top negotiator has said the protocol is unsustainable.

"It's super important that we keep the purpose of the nature of the protocol in mind, which is to support the Belfast Good Friday Agreement and not to undermine it, as it risks doing," Brexit Minister David Frost (pictured) told lawmakers.

The 1998 peace deal largely brought an end to the "Troubles" - three decades of conflict between Irish Catholic nationalist militants and pro-British Protestant "loyalist" paramilitaries in which 3,600 people were killed.

Johnson has said he could trigger emergency measures in the Northern Ireland protocol after its implementation disrupted trade between Britain and its province.

The protocol aims to keep the province, which borders EU member Ireland, in both the United Kingdom's customs territory and the EU's single market.

The EU wants to protect its single market, but an effective border in the Irish Sea created by the protocol cuts off Northern Ireland from the rest of the United Kingdom - to the fury of Protestant unionists.

Frost said London wanted agreed solutions to enable the Protocol to operate without undermining the consent of either broad community in Northern Ireland.

"If we can't do that, and at the moment, we aren't making a lot of progress on that - if we can't do that then all options are on the table for what we do next," Frost said. "We would rather find agreed solutions."

Asked if the Britain would invoke Article 16 of the Northern Irish Protocol to force a rethink, Frost said: "We are extremely concerned about the situation.

"Support for the protocol has corroded rapidly," Frost said.

"Our frustration ... is that we're not getting a lot of traction, and we feel we have put in a lot of ideas and we haven't had very much back to help move these discussions forward, and meanwhile ... time is running out."

Ireland's foreign minister said in response that the province's trading arrangement's were not a threat to the territorial integrity of the United Kingdom, but simply a means of managing disruption from its exit from the EU.

"Don't know how many times this needs to be said before it's fully accepted as true. NI Protocol is a technical trading arrangement to manage the disruption of Brexit for the island of Ireland to the greatest extent possible," Simon Coveney said on Twitter.

Continue Reading

Brexit

Getting nothing back, UK minister says frustration is growing with EU

Published

on

By

Frustration in the British government is rising because London has offered a number of proposals to solve a standoff with the European Union over Northern Ireland but has not had a lot back, Brexit minister David Frost said on Wednesday (16 June), writes Guy Faulconbridge, Reuters.

"Our position is that we would like to find negotiated agreements that ... bring it back to the sort of light-touch agreement that we thought we were agreeing," Frost told a parliamentary committee.

"Our frustration ... is that we're not getting a lot of traction, and we feel we have put in a lot of ideas and we haven't had very much back to help move these discussions forward, and meanwhile ... time is running out."

Continue Reading
Advertisement

Twitter

Facebook

Advertisement

Trending