U.K. Finance Remains Downbeat on EU Access Without a Brexit Deal

The British finance industry won’t secure more access to European Union markets while politicians disagree over the broader post-Brexit trade deal, industry figures told a parliamentary hearing Wednesday.

Finance barely features in the deadlocked political talks, yet the lack of progress has snarled up separate work that will enable U.K. firms to trade within the bloc in limited ways, replacing the sweeping “passport” rights of EU membership, they said.

“We think a successful free trade agreement would lead to political and economic goodwill that could be deployed into other ancillary agreements, namely financial services equivalence determinations,” Conor Lawlor, Brexit director at the UKFinance trade body, told the hearing.

The EU has granted just one equivalence ruling so far, which ensures European derivatives traders can use London’s dominant clearinghouses for 18 months. Lawlor said he expects a further ruling on central securities depositories in the coming weeks, but “we’re unlikely to see any more come to fruition” until a wider agreement is reached.

Andrew Gray, who leads Brexit financial-services issues for PwC in Britain, said a call between business leaders and Prime Minister Boris Johnson this week offered no updates for the finance sector.

Data Sharing

“At this stage, it is not our expectation that further equivalence determinations are made until we see broader movement on the trade agreement,” said Gray.

Gray also said that about 8% of financial and professional services staff in the U.K. are EU nationals.

Neil Ross, policy manager for the digital economy at the TechUK lobbying group, said the EU was also unlikely to allow data-sharing with the U.K. through an “adequacy” ruling before a trade deal is struck.

“It’s likely that the two will be strongly linked -- if we have an FTA with the judicial and security cooperation partnership embedded in it, then the U.K.’s chances of adequacy rise significantly,” Ross said.

©2020 Bloomberg L.P.

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