The Guardian reports that UK negotiators have told their counterparts in Brussels that about 7,000 European-based investment funds that rely on British clients for their cash and profits will be hit by regulators unless the EU changes its position on the City of London after Brexit.
As frustration grows within Whitehall at what is seen as a dogmatic position taken by the EU’s chief negotiator, Michel Barnier, the British side has upped the ante by making an implicit threat to EU interests.
A section of a UK presentation made to the European commission’s negotiators last week, and seen by the Guardian, says that unless Brussels allows all UK sectors of the City of London to continue to operate after Brexit as they do today, at least initially, obstacles to European financial interests operating in the UK could also be put in place.
The British government says the EU’s “equivalence regime”, under which UK providers would have the right to offer financial services in the European economic area after Brexit, does not cover enough sectors or provide adequate assurances to UK-based banks and fund managers.
The UK also wants equivalence decisions to be made collaboratively between Brussels and Whitehall on whether parts of the financial sector will be able to continue to operate across the Channel as regulations diverge after Brexit.