The U.K. and EU struck a tentative deal that would give Britain’s financial services firms continued access to European markets after Brexit, the Times reported Thursday citing anonymous government sources.
British and EU negotiators agreed on all aspects of their future relationship on services and the exchange of data, according to the paper.
The deal would give London’s vast financial services hub basic access to European Union markets after Brexit. The Times newspaper reported that the tentative deal had been reached on all aspects of a future partnership on services, as well as the exchange of data.
“We are making progress,” an official, who spoke on condition of anonymity, told Reuters, adding that the financial services deal would be based on the EU’s existing “equivalence” system. Such a deal would give the United Kingdom the same level of access to the EU as major U.S. and Japanese firms, while however tying it to many EU finance rules for years to come.
Reuters report After the shock 2016 referendum vote to leave the EU, many bankers and politicians have been hoping that London could secure a preferential deal to give deep access to the bloc’s markets.
A deal along the lines of equivalence falls far short of that.
“Under the services deal, the EU would guarantee U.K. companies access to European markets as long as British financial regulation remained broadly aligned with that of Europe,” the Times reported.
“Neither side would unilaterally deny market access without first going through independent arbitration and providing a notice period significantly longer than the current 30 days,” it added.
Bloomberg says that the agreement marks a downgrade from the status quo. The Times says it would be based on equivalence — the tool that the EU already uses to allow non-EU companies to sell services in the bloc. That’s what the EU has long offered the U.K., and the U.K. has long said it’s not good enough. But the accord includes some new features that would make it more palatable, the Times said.
The Times report says that in a sign that a wider deal is close to being finalised, Dominic Raab, the Brexit secretary, said in a letter to the Commons Brexit committee published yesterday that the government expected to have it completed within three weeks. The Northern Irish backstop was still a matter of “concern”, he wrote, but added: “Despite our difference we are not that far from an agreement on this issue. The end is firmly in sight.”