Since the Brexit vote that shocked the financial markets, there have been numerous discussions regarding the landscape of the UK’s post-Brexit financial industry.
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UK Prime Minister Theresa May has been an advocate of a deal mirroring those made between the EU and other countries, reiterating today that the UK is adamant on including financial services in any future agreement. However, recent indications from the City of London appear to indicate a lack of satisfaction with the PM’s agenda.
Financial Services Remain Biggest Obstacle
The Brexit saga appears to be getting more complex, as the deadlines to reach a deal are steadily approaching. A recent proposal for an agreement has been crafted by the City of London suggesting that firms would be able to “operate in both jurisdictions” (UK and EU), without having to obtain a local license.
The proposal takes the agenda of the UK beyond the current aspirations of May, who continues to bring up current agreements between the EU and other countries as a blueprint for a future agreement. According to Bloomberg, she said: “The EU has included financial services, to varying degrees, in quite a number of the trade agreements that they have already established with other countries.”
However, May's agenda may not be enough to satisfy her home base, who could classify her negotiating skills as weak against EU Chief Brexit Negotiator Michel Barnier. Canada has been frequently mentioned as a basis for comparison for the agreement. However, while Canada’s agreement does provide EU financial services access for Canadian banks, they must first acquire a local license in order to conduct business in the region.
It has become clear that the financial industry in the UK is seeking a more liberal agreement than that of Canada, due in part to the strong links forged during the UK's years in the EU.
The topic of financial services has lingered atop the list of crucial topics in the post-Brexit negotiation process. The issue has caused a stalemate due to the ramifications for the UK financial industry.
Banks Prepare for Post-Brexit Environment
Many banks have already relocated their EU headquarters to alternative markets in the region as a measure to prepare for next year’s designated detachment. Some banks have chosen Frankfurt as a their landing spot, while others have opted for Paris, Dublin, Amsterdam, and Luxembourg.
