Great Britain

EU REJECTS UK's financial demands as Brexit talks hit new red line row

The bloc wants the ability to cut off British bankers and investors from its financial services industry at short notice. Britain quit the EU on January 31, but remains in lockstep with Brussels until the post-Brexit transition period expires at the end of the year. For after the standstill arrangement, British negotiators are seeking special treatment for the country’s financial services industry, EU sources have claimed.

They want to ensure banks, insurers and asset managers have predictable access to EU markets, which is Britain’s biggest financial services export destination, worth some £26 billion each year.

Brussels grants access based on so-called “equivalence” to any third country if it deems its rules are equivalent or as robust as the EU’s.

The same level of limited access is used by the United States, Japan and Singapore, but this can be unilaterally withdraw by the bloc with as little as 30 days’ notice.

Last year, the European Commission revoked Switzerland’s “equivalence” arrangements after its negotiations with the bloc over a new relationship treaty soured.

Michel Barnier and Boris Johnson

EU negotiators reject UK's financial services plan, according to sources (Image: GETTY)

Michel Barnier

Michel Barnier is the EU's chief Brexit negotiator (Image: GETTY)

An EU diplomat said: “The UK is seeking co-management of financial equivalence decisions.

“They want an in-built consultation process that that unilaterally revoking of any licences would not be as easy as it is for third countries currently.”

An EU official described Britain’s demand as “binding joint procedures for withdrawing equivalence”.

But the European Commission is said to have rejected the concept.

City of London

City of London bankers could have access to EU cut with just 30 days' notice (Image: GETTY)

EU sources said the bloc is concerned that Britain could begin to diverge away from the its rules in the “short to medium-term” after leaving the transition period on equal footing.

Brussels could agree to a more long-term deal if Britain agrees to keep in line with the bloc’s standards beyond the end of the year.

“They’re equivalent now because they’re still under the system,” an EU source told Express.co.uk.

“We’re not interested in whether they’re equivalent in the summer of 2020, we’re interested in what happens in 2021, 2022, 2023.”

MUST READ: Trade unionist explains why left-wingers should oppose the EU

David Frost and Michel Barnier

Negotiators David Frost and Michel Barnier resumed talks this week (Image: GETTY)

It is understood a growing list of member states are ready to order Michel Barnier, the EU’s chief Brexit negotiator, to maintain a hardline approach when it comes to financial services.

They want to retain their “prerogative” to decide whether Britain deserves its “equivalence” status without the influence of London in the discussions.

The Political Declaration, signed by Boris Johnson last year, said each side would be autonomous in financial regulation.

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In a bid to break the deadlock David Frost, the Prime Minister’s chief negotiator, resumed trade talks yesterday with Mr Barnier.

Both sides hope this week’s negotiations can break the stalemate ahead of a high-level meeting between Mr Johnson and EU Commission President Ursula von der Leyen later this summer.

The Prime Minister has made clear he will walk away from negotiations this autumn to prepare for a world trade terms exit from the bloc if a deal doesn’t look possible.

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