| Author (Corporate) | United Kingdom: House of Commons: Library |
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| Series Title | Briefing Paper |
| Series Details | No.7628 (12.07.18) |
| Publication Date | 12/07/2018 |
| Content Type | Journal | Series | Blog |
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This House of Commons Library briefing paper (periodically updated since June 2016) brought together responses from financial organisations about the impact of the vote to leave the EU. The vote to leave the EU had significant implications for the UK financial services sector, an economic sector which was critical to the economy. The degree of inter-linkage between the ‘City’ and the EU economies was substantial economically speaking and intricate in terms of the legislative interface. Further information Financial Services were of especial importance to the UK economy. The vote to leave the EU had significant implications for the financial services sector. The degree of inter-linkage between the ‘City’ and the EU economies was substantial, economically speaking, and intricate in terms of the legislative interface. There was precious little certainty over what will happen next. With respect to the regulatory framework, the new chief Executive of the FCA, Andrew Bailey, confirmed that whilst the FCA had set up an internal Brexit unit to deal with Brexit specific activity, its main work remained unchanged. Many of the FCA rules were derived from the EU and the FCA would continue to enforce existing rules and work to implement ones that had been agreed, but which were not yet in place. For the Regulator therefore it was ‘business as usual’. Along with most other industrial and commercial sectors the more considered reaction of the industry to any question is 'it all depends'. In the absence of any clear guidance on what the EU negotiations would lead to in terms of the treatment of services, commentators had largely been reduced to guessing what large institutions intended to do from their pre vote statements and matching these to the permutations of different possible negotiation outcomes. In a sector with different interests and priorities and with a wide range of possible outcomes, the possible permutations of outcomes was very high. The debate and commentary had been largely framed around whether banks and other would stay (in London) or go. Informing this choice were two issues: + timing Despite one banking commentator saying that most banks had their 'hands are quivering over the relocate button' currently, only one bank and the European Banking Authority have said that they were leaving. Negative reaction to the July 2018 White Paper On the 12 July 2018 the UK Government published a much anticipated White Paper The future relationship between the United Kingdom and the European Union. While setting out plans for a UK-EU free trade area for goods, it proposed greater divergence in services. In the section dealing with financial services the White Paper said that the UK would propose a new economic and regulatory arrangement with the EU in financial services. The government suggested that it would seek a system of regulatory equivalence, rather than the previously preferred mutual recognition arrangement. Passporting was not possible. In an immediate response the Policy Chairman of the City of London Corporation Catherine McGuinness expressed disappointment: 'Today’s Brexit white paper is a real blow for the UK’s financial and related professional services sector ... As the EU’s gateway to capital, the UK is a significant trading partner for the bloc. It’s in the interests of households and businesses on both sides of the Channel that an ambitious future trading relationship, covering services as well as goods, is secured. Miles Celic, Chief Executive Officer, TheCityUK said 'The overriding issue for financial and related professional services firms is the ability to continue serving customers and clients. Mutual recognition would have been the best way to achieve this. It’s therefore regrettable and frustrating that this approach has been dropped before even making it to the negotiating table. In hundreds of discussions across the EU, the industry has never come across an unanswerable technical or commercial barrier to this approach. The EU’s objections have always been political. ... Brexit was always going to result in access to the EU market being more difficult. Therefore, an effective and secure future regulatory relationship is vital. It is now urgent that we make rapid progress on the negotiations, both around the future relationship and on immediate issues for customers such as contract continuity'. |
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| Source Link | Link to Main Source http://researchbriefings.files.parliament.uk/documents/CBP-7628/CBP-7628.pdf |
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| Subject Categories | Business and Industry |
| Countries / Regions | United Kingdom |
