Click here to read Anneliese's full report: 'Brexit: A New Deal for Financial Services'
A New Deal for Financial Services
The future of financial services will be one of the most hotly-contested areas of the forthcoming UK-EU negotiations, given the importance of the City of London to the UK economy, but also to the wider EU economy.
There are a number of risks that those negotiations will descend into acrimony and produce a result which is bad for everyone: if the UK insists on threatening to undercut the EU, by deregulating and turning itself into a tax haven; if the EU seeks to "punish" the UK in the negotiations and ends up driving financial services not just out of the UK but out of Europe altogether; and if the financial services industry itself plays the two jurisdictions off against one another, seeking to create loopholes and opportunities for arbitrage.
But there is another, better way. The UK and EU could both enter into negotiations with open minds, looking to find a win-win solution that protects vital sources of funding for businesses across the continent. And the industry itself could play a constructive role, committing to uphold high regulatory standards in return for a deal that allows the maximum possible market access after Brexit.
We could have a 'New Deal for Financial Services': a three-pronged approach to securing this better, positive arrangement:
1) An agreement on both sides that the UK should be immediately considered as an "equivalent" jurisdiction when it comes to certain key pieces of European legislation, from the moment that the UK leaves.
2) A process to create new "equivalence" arrangements in other areas of financial services legislation where these do not already exist, so as to ensure a smooth transition from EU membership to being outside the EU.
3) The creation of a new EU-UK 'Financial Markets Regulatory Dialogue' to be in place after Brexit, to ensure regulatory convergence wherever possible in future, and to avoid the creation of loopholes or a deregulatory race to the bottom.
If all sides can agree to these three principles, then in the crucial area of financial services we should be able to secure a future EU-UK deal that works for everyone – and most importantly, for UK and EU businesses, consumers and citizens.
Read the full report to find out more.