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.
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.
UK sends two navy boats to Jersey after France threatens blockade
Britain is sending two navy patrol boats to the British Channel Island of Jersey after France suggested it could cut power supplies to the island if its fishermen are not granted full access to UK fishing waters under post-Brexit trading terms, write Richard Lough and Andrew Macaskill.
Prime Minister Boris Johnson pledged his "unwavering support" for the island after he spoke with Jersey officials about the prospect of the French blockade.
Johnson "stressed the urgent need for a de-escalation in tensions," a spokesperson for Johnson said. "As a precautionary measure the UK will be sending two Offshore Patrol Vessels to monitor the situation."
Earlier, France's Seas Minister Annick Girardin said she was "disgusted" to learn that Jersey had issued 41 licences with unilaterally imposed conditions, including the time French fishing vessels could spend in its waters.
"In the (Brexit) deal there are retaliatory measures. Well, we're ready to use them," Girardin told France's National Assembly on Tuesday (4 May).
"Regarding Jersey, I remind you of the delivery of electricity along underwater cables ... Even if it would be regrettable if we had to do it, we'll do it if we have to."
With a population of 108,000, Jersey imports 95% of its electricity from France, with diesel generators and gas turbines providing backup, according to energy news agency S&P Global Platts.
Jersey's government said France and the European Union had expressed their unhappiness with the conditions placed on the issuance of fishing licences.
Jersey’s external relations minister, Ian Gorst, said the island had issued permits in accordance with the post-Brexit trade terms, and that they stipulated any new licence must reflect how much time a vessel had spent in Jersey's waters before Brexit.
"We are entering a new era and it takes time for all to adjust. Jersey has consistently shown its commitment to finding a smooth transition to the new regime," Horst said in a statement.
The rocky island sits 14 miles (23 km) off the northern French coast and 85 miles (140 km) south of Britain's shores.
The French threat is the latest flare-up over fishing rights between the two countries.
Last month, French trawlermen angered by delays to licences to fish in British waters blocked lorries carrying UK-landed fish with burning barricades as they arrived in Boulogne-sur-Mer, Europe’s largest seafood processing centre.
Brexit barriers in focus as Northern Ireland's DUP kicks off leadership contest
Northern' Ireland's biggest party was set for its first ever leadership election after its Westminster chief Jeffrey Donaldson threw his hat into the ring, promising to focus on the divisive issue of post-Brexit trade barriers.
Donaldson will stand against Edwin Poots to lead the Democratic Unionist Party at a time of heightened instability in the British province and unionist anger over the installation of a customs border in the Irish Sea.
Both Donaldson and Poots, Northern Ireland's agriculture minister, stopped short of making detailed campaign promises. But Britain, Ireland and the rest of Europe will be watching for any hardening of stances on Brexit or social issues including abortion that could alter the political balance ahead of elections next year.
The DUP currently leads Northern Ireland in a power-sharing government with its Irish nationalist rivals Sinn Fein.
Donaldson or Poots will take over the leadership from Arlene Foster who announced last week she was stepping down as Northern Ireland's First Minister at the end of June, bowing to pressure from party members unhappy at her leadership. Read more
Her departure has added to instability in the region, where angry young pro-British loyalists rioted in recent weeks, partly over the barriers that they feel have cut them off from the rest of the UK.
"I will develop and swiftly implement an agreed programme of meaningful reform and clear policy direction on key challenges like the protocol," Donaldson said in a video announcement, referring to the post-Brexit trading arrangements.
Like Foster, Donaldson, 58, is a former member of the more moderate Ulster Unionist Party. He was part of the negotiating team that stuck a deal to prop up the government of former British Prime Minister Theresa May in 2017.
Once the DUP's support was no longer needed, May's successor Boris Johnson broke the party's "blood red line" and agreed to erect the trade barriers.
Poots, 55, is one of a number of DUP ministers who have protested against the Brexit arrangements by refusing to attend meetings with Irish counterparts established under the 1998 peace deal that ended 30 years of violence in Northern Ireland.
Poots, a young earth creationist who rejects the theory of evolution, announced he was standing last week.
Statement by Commission Vice President Maroš Šefčovič following the conclusion of the EU-UK Trade and Co-operation Agreement
European Commission Vice President Maroš Šefčovič warmly welcomes the ratification of the EU-UK Trade and Co-operation Agreement, which will now be fully applicable as of 1 May 2021. This comes after an overwhelming vote of consent by the European Parliament on 27 April and subsequent Council decision today, thereby concluding the ratification process. The EU and the UK will exchange letters to that effect.
"The ratification of the Trade and Co-operation Agreement is good news for European citizens and businesses. It provides a solid foundation for our longstanding friendship, co-operation and partnership with the United Kingdom on the basis of shared interests and values.
"In practice, the Agreement helps avoid significant disruptions, while protecting European interests and upholding the integrity of our Single Market. It also ensures a robust level playing field, by maintaining high levels of protection in areas, such as climate and environmental protection, social and labour rights, or state aid. Moreover, the Agreement includes effective enforcement, a binding dispute settlement mechanism and the possibility for both parties to take remedial measures.
"Democratic scrutiny will continue to be key in the implementation phase of the Agreement in order to ensure faithful compliance. Unity among EU institutions and member states will remain a cornerstone during this new chapter in our EU-UK relations."
Vice President Šefčovič reiterates that the European Commission looks forward to a strong, constructive and collaborative partnership with the United Kingdom, based on mutual trust and respect. We have far more in common than that which divides us. He will reach out this week to Lord David Frost, co-chair of the EU-UK Partnership Council, to prepare the launch of its work, including the work of Specialized Committees.
Finally, the Commission will continue to work tirelessly for joint solutions so that the Withdrawal Agreement, and the Protocol on Ireland / Northern Ireland in particular, is also fully implemented and works for the benefit of everyone in Northern Ireland.
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