U.K. Says Too Risky to Keep EU Rules on Services After Brexit

(Bloomberg) -- The U.K. wants to break free from European Union rules on services after Brexit because of the risk the bloc will come up with “unwelcome” new regulations, Prime Minister Theresa May’s deputy said.

David Lidington, standing in for May in Parliament, explained why the government is happy to keep EU rules on goods in order to facilitate trade, but not for services.

“It’s in services where regulatory flexibility matters most for both current and future trading opportunities,” Lidington said on Wednesday. While EU rules, known as acquis, on goods have been “stable for about 30 years,” that isn’t true for services, he said.

“The risk of unwelcome EU measures coming into play through the acquis on services is much greater,” he said.

Finance industry lobbyists have expressed concern about the prospect of the EU, without U.K. influence, coming up with new rules that would be damaging to the City of London.

The decision to seek a deal which allows the U.K. to stick to EU rules just for goods was made at a Cabinet meeting last week and details of the plan will be fleshed out in a so-called White Paper to be published on Thursday.

The U.K. has previously said it wants financial companies to be able to operate in the bloc on the basis of mutual recognition of rules. The EU has rejected this, and there was no mention of the idea in the summary of the government’s plan released on Friday.

The potential problem with the U.K.’s plan to stick to EU rules for goods but not services is that the EU has repeatedly said that it won’t allow Britain to have partial access to its single market, which it sees as the crowning achievement of 60 years of European integration and covers both goods and services.

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