EU’s Barnier Keeps Equivalence Threat Hanging Over London Banks
EU’s Barnier Keeps Equivalence Threat Hanging Over London Banks
(Bloomberg) -- Michel Barnier, the European Union’s chief Brexit negotiator, rebuffed pressure from the British government to reach a quick deal giving London’s banks access to the single market.
Speaking after the two sides ended their first week of negotiations over their future relationship, Barnier said the decision to grant U.K.-based firms so-called equivalence was the EU’s alone to make. Without it, firms won’t be able to offer their services across the single market after the end of this year.
With Britain and the the EU facing what Barnier called “serious” differences as they thrash out a trade deal, the EU’s top negotiator is exerting his leverage, holding out on a decision on financial services -- a key issue for London -- until the second half of the year just as the bloc tries to get access to U.K. fishing waters, a major concern for France.
“The equivalency decisions themselves will be taken later, because that’s part of what we’re responsible for, and part of the decision that we have to take autonomously,” he said. “There will be dialog, of course, but no negotiations.”
Britain, home to Europe’s biggest financial center, had been lobbying the EU to make a quick decision.
“The U.K. and the EU should be able to conclude equivalence assessments swiftly,” Chancellor of the Exchequer Rishi Sunak wrote in a Feb. 27 letter to EU financial services chief Valdis Dombrovskis. “I see no reason why we cannot deliver comprehensive positive findings to the June timeline.”
The EU omitted that deadline when it outlined its opening positions on the overall negotiations on future ties with the U.K. because it said that as it was its unilateral decision to make it didn’t need to be part of its mandate for the talks.
Barnier’s remarks don’t represent a shift in position, according to an EU official who added that it has always been clear that the granting of equivalence is a two-step process. The end-June goal for the conclusion of the assessments is the only date the bloc has committed to, meaning there’s no firm guarantee that a decision will come even by the end of the year when the U.K. leaves the single market.
Under the EU’s equivalence rules, foreign financial firms can be given access to the bloc only if officials in Brussels think the rules are tough enough in the companies’ home state.
--With assistance from Olivia Konotey-Ahulu, Robert Hutton and Dara Doyle.
To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;Silla Brush in London at sbrush@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Edward Evans, James Hertling
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