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Brexit and the City of London: What has changed?




Britain and the European Union agreed a new post-Brexit financial services pact on Friday that will allow them to co-operate on regulation but does little to improve the City of London’s access to the bloc, writes Huw Jones.

Britain left the European Union in January and its £130 billion ($179.17bn) financial services sector lost direct access to the bloc, which had been its biggest customer, worth about £30bn per year.

The relationship helped cement London’s position as one of the world’s biggest financial centres and as a major contributor to British tax revenues.

The following details how the City of London’s ability to access the EU market and serve clients in the bloc has changed.


Financial services were not part of the EU-UK trade deal that came into effect in January. Blanket access for British financial firms to the EU has ended and any future access will depend on an EU system known as equivalence.


The pact sets up a forum, similar to what the EU already has had for years with the United States. It will provide a space for informal and non-binding discussions between UK and EU financial regulators, but not negotiate market access.


This refers to an EU system that grants market access to foreign banks, insurers and other financial firms if their home rules are deemed by Brussels to be “equivalent”, or as robust as regulations in the bloc.

It is a patchy form of access that excludes financial activities like retail banking. It is a far cry from continued “passporting”, or full access, that banks lobbied for in the aftermath of the 2016 British referendum vote to leave the EU.

Access under the system of equivalence can be withdrawn at one month’s notice, making it unreliable, but Britain hopes the new regulatory forum can help persuade Brussels to make the system more predictable.


Brussels has only granted equivalence so far for two activities: derivatives clearing houses in Britain since January for 18 months, and settling Irish securities transactions until June.

Brussels says it is in “no rush” to grant equivalence given that it wants to build up its own capital markets to cut reliance on the City and see how far Britain wants to diverge from rules used in the bloc.

Faced with limited or no direct access, financial firms in London have already moved 7,500 jobs and over a trillion pounds in assets to new EU hubs to avoid disruption to EU clients.

Trading euro stocks, bonds and derivatives have left London, turning Amsterdam into Europe’s biggest share trading centre. Britain and the EU have agreed that asset managers in London can continue to pick stocks for funds in the EU.


No. To help maintain London as a global financial centre Britain is allowing EU firms to stay for up to three years, in the hope they will apply for permanent UK authorisation. Britain is also unilaterally allowing financial firms in the EU to offer selected services like credit ratings directly to British customers.

Britain has allowed UK firms to use derivatives trading platforms in the bloc to avoid ruptures in business with EU clients.


Brussels says it won’t grant market access until it has a clear idea of how far Britain wants to diverge from financial rules inherited from the bloc, fearing that the City will end up with a competitive edge over the bloc’s banks.

Britain has said it won’t apply some EU rules, will tweak others like insurance capital norms, and will introduce its own version of pending European regulation for investment firms.

It is also easing listing rules, making Britain more attractive for fintechs, and due to publish proposals to make the capital market more globallly attractive. It has already started by easing curbs on “dark” or anonymous share trading, a practice EU countries distrust.

Britain insists it won’t lower standards and will stick to any rules agreed at the global level.



For now, no. London still has a towering lead over rivals Frankfurt, Milan and Paris when it comes to trading stocks, currencies and derivatives and playing host to asset managers.

Financial firms say shifting more capital out of London than is necessary under Brexit would cause unnecessary and costly market fragmentation.

But in the longer term, if the EU takes a tough line on equivalence and its financial centres reach a critical mass in trading key asset classes, the attractions of London as a financial hub would diminish.

($1 = £0.7256)


UK and Gibraltar gear up for tough negotiations with EU

Catherine Feore



Today (29 March), UK Foreign Secretary Dominic Raab and Gibraltar Chief Minister Fabian Picardo met in the UK-Gibraltar Joint Ministerial Council. Discussions were focused on the need to reach an agreement on a future treaty between the UK and EU in respect of Gibraltar.

Gibraltar was not covered by the EU-UK Trade and Cooperation Agreement agreed at the end of 2020, however, an “in principle” political agreement on a “proposed framework for a EU/UK agreement or treaty on Gibraltar’s future relationship with the EU” was reached between Spain and the UK on 31 December 2020.

The discussions on 31 December went to the wire, in a statement at the time the Gibraltar Chief Minister described the discussions as: “So close to the wire that I think all of us involved in the negotiation felt the wire cutting into our flesh as we finalized arrangements in the early hours of this morning.”

The Chief Minister thanked the Spanish Prime Minister for reaching an agreement that looked beyond the disputed issue of sovereignty of the rock. He also thanked both the Prime Minister and the Foreign Secretary, at the time, for understanding the need for a differentiated solution for Gibraltar’s “socio-economic and geographic reality”.

Nevertheless, the agreement involved significant compromise on issues usually associated with a sovereign state. Spain, as the neighbouring Schengen member state, will be responsible for the implementation of Schengen. This will be managed by the introduction of a FRONTEX (EU border agency) operation for the control of entry and exit points from the Schengen area at the Gibraltar entry points, for an initial four year period. It will also seek to address maximized and unrestricted mobility of goods between Gibraltar and the European Union. The agreement also touched on a wide range of other issues from the level playing field to citizens’ rights. 

The European Commission is currently developing its own mandate for the negotiation of a Treaty, which is expected in the near future. This will then need to be agreed by the European Council before negotiations begin. A key issue for Gibrlatar will be the need to maintain freedom of movement given that 40% of its workforce crosses the border from Spain each day. The overseas territory is also heavily dependent on its offshore banking.

Ahead of today’s meeting British Foreign Secretary Dominic Raab said: “As a valued member of the UK family, we stand side by side with Gibraltar as we enter into the forthcoming negotiations with the EU on Gibraltar’s future relationship.

“We are committed to delivering a treaty which safeguards the UK's sovereignty of Gibraltar and supports the prosperity of both Gibraltar and the surrounding region.”

Current relations between the EU and UK have deteriorated, in relation to the commitments it made in the Withdrawal Agreement; in particular, the UK has taken a unilateral decision outside the agreements decision procedures to suspend many of the obligations for a six-month period to October. The Commission has started a legal infringement procedure against the UK for failure to respect the agreement and for being in breach of its commitment to act in good faith.

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Britain toughens its post-Brexit asylum system





Britain will introduce new rules for those seeking asylum, making it more difficult for refugees entering illegally to stay in the country in what Interior Minister Priti Patel (pictured) called a firm but fair system, writes Elizabeth Piper.

Since Britain completed its exit from the European Union at the end of last year, Prime Minister Boris Johnson has been keen to set out a new independent vision for the country, unveiling new policies on defence, foreign affairs to immigration.

In what the government calls the biggest overhaul of the asylum system in decades, the “New Plan for Immigration” sets out a plan to resettle refugees at urgent risk more quickly while making it more difficult for those arriving illegally.

“Under our New Plan for Immigration, if people arrive illegally, they will no longer have the same entitlements as those who arrive legally, and it will be harder for them to stay,” Patel said in a statement.

“Profiteering from illegal migration to Britain will no longer be worth the risk, with new maximum life sentences for people smugglers ... I make no apology for these actions being firm, but as they will also save lives and target people smugglers, they are also undeniably fair.”

She also said those arriving after travelling through a safe country such as France would not have immediate entry into the system and that the government “would stop the most unscrupulous abusing the system by posing as children”.

Reducing immigration was one of the promises made by the Vote Leave campaign, for which Johnson was a figurehead, during the 2016 referendum on membership of the EU, and the government has said it would toughen up its post-Brexit asylum system.

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GB exports to Ireland slump as Brexit bites

Ken Murray, Dublin correspondent



Despite constant assurances that trade between Britain and the island of Ireland would flow smoothly in the post-Brexit World, the reality is proving to be quite the opposite. GB exports to Ireland are declining, revenues are falling and it’s only March, as Ken Murray reports from Dublin.

They say it was the Greek philosopher Aesop who once said in 260BC: “Be careful what you wish for, lest it come true.”

Three months in to the British exit from the European Union, some doubters in the Conservative Party in London must be wondering at this early stage if political divorce from Brussels was such a good idea after all.

New figures from the Irish Central Statistics Office (CSO) reveal that during the month of January this year, British exports to the Republic of Ireland fell by £856 million or just under €1 billion compared to the same month in 2020.

To put that another way, British exports to southern Ireland fell by 65%. The figure is worse in the area of food and live animals where exports to the Republic fell by 75% or €62 million, a clear sign that the graphs are going downwards!

Whether COVID-19 and lack of consumer demand is to blame is still unclear but one thing is certain, British goods entering the Republic of Ireland are being met with unwelcome customs checks and import controls which are proving to be a major inconvenience for GB exporters and Irish importers.

Already, much anticipated alarm bells are going off with the Irish Road Hauliers Association saying that not only was this to be expected but additional costs are mounting which have the potential to drive some trucking companies out of business.

In a press statement, it said: “Through engagement with transport and logistics companies, we are aware of problems and backlogs in the supply chain, particularly in GB.

"We know that the introduction of new import and export regulatory requirements alongside new checks and controls on trade between the EU and UK, excluding Northern Ireland, adds additional burdens on companies and our Departments and Agencies are continuing to engage with companies and haulage and logistics companies to help them work through these new checks and controls." 

However the CSO said in its statement that some of the decline in British exports may have been due to pre-Christmas stockpiling and the fact that the hospitality sector in Ireland is closed due to the Covid pandemic thus reducing consumer demand for certain products.

With British suppliers to Ireland losing out financially-so far- there are growing signs, ironically, that north/south trade on the island of Ireland is picking up!

Northern Ireland, which is politically in the UK but technically speaking, is ‘remaining’ in the European Union purely for trade purposes only, has seen its traders record increased volumes of product purchased from the Republic instead of GB to circumvent long customs checks, inspection controls and delays at ports such as Belfast and Larne.

The CSO figures show that Republic of Ireland imports heading south from Northern Ireland were up by 10% from €161m to €177million.

On the other hand, exports going to Northern Ireland from the South were up 17% in January from €170m to €199m compared to the same period in 2020.

While this change in purchasing patterns may be good for some opportunistic traders in the Republic, any further decline in British exports to the island of Ireland may force Boris Johnson to do an embarrassing u-turn on a previously held position.

Speaking in the House of Commons London on January 13th last, he told Sir Jeffrey Donaldson of the Northern Ireland Democratic Unionist Party that his Government would have "no hesitation" in triggering Article 16 of the N.I. Protocol if 'disproportionate' problems arise.”

The activation of Article 16 would see a contentious hard physical border re-instated on the island of Ireland to allow free movement of goods between GB and Northern Ireland.

Such a move though could spark a re-emergence of hostile Irish republican terrorism and would, in all likelihood, see the US Government refuse to sign a trade deal with the UK.

Joe Biden, the most ‘Irish’ US President since JFK, has indicated more than once in recent months that any move to undermine the 1998 British-Irish Peace Agreement would severely strain relations between Washington and London.

With falling GB export revenues from Ireland and a threat to impose Article 16, Boris Johnson may yet regret what he wished for!

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