- REUTERS/Paul Hackett
- UK Finance calls on UK and EU to agree continued free movement for financial workers after Brexit.
- Any Brexit deal for financial services should be “based on mutual acceptance of regulatory and supervisory co-operation and reciprocity,” the report says.
- Recommendations come two days after Brexit Secretary David Davis hinted strongly that a similar travel arrangement might be agreed during Brexit talks.
LONDON – One of Britain’s biggest financial lobby groups has called for continued free movement across Europe for bankers and other financial services workers after Brexit in a new report released on Thursday.
UK Finance’s report, titled “Supporting Europe’s Economies and Citizens,” argues that any free trade agreement between the UK and EU should be based on the “based on mutual acceptance of regulatory and supervisory co-operation and reciprocity,” arguing that both the UK and EU must continue to allow cross-border trade in financial services, or risk major disruption to the industry.
“The UK’s exit from the EU will transform the provision of financial services between the two parties from a relationship based on a deeply integrated EU single market finance supply chain to one based on trade between two separate jurisdictions,” the report’s foreword says.
“For the tens of thousands of EU and UK customers and millions of financial transactions currently relying on cross-border services, this is a significant and potentially disruptive change.”
Ensuring that the trade in financial services can continue will rely heavily on continued free movement of workers, the report argues, saying: “All services are delivered by people, and the freedom of people to move between countries will often be integral to realising the kinds of commitments to open trade [mentioned in the report].”
“An EU-UK FTA should provide for comprehensive agreements on temporary movement between the two markets for business purposes, unless such short-term travel to, and temporary presence in, the other market is covered by a wider agreement between the EU and the UK on freedom of movement of persons between the two sides,” it continues.
UK Finance’s report comes as major financial institutions make plans to shift staff out of the UK as a result of the expected loss of Britain’s so-called financial passport.
The passport is effectively a set of rules and regulations that allow UK based financial firms to access customers and carry out activities across Europe. Many non-EU lenders use the passport to operate a hub in the UK and then sell services across the 28-nation bloc.
Once Britain leaves the EU, however, it is almost certain to lose passporting rights, which are tied strongly to membership of the single market, a marketplace the UK intends to leave as part of Brexit. This means that to continue providing clients with comprehensive services across the EU after Brexit, many lenders will need new branches.
The report is released in the week that Brexit Secretary David Davis hinted strongly that a travel arrangement similar to UK Finance’s proposal might be agreed during Brexit talks.
In a speech at Swiss bank UBS’ annual European Conference, Davis told an audience of UBS staff and clients that the UK government wants to ensure that the City of London remains at the heart of Europe’s financial services sector, and will place special emphasis on the City as Brexit talks continue.
“We want to ensure that our new partnership with the EU protects the mobility of workers and professionals across the continent,” he told the audience at London’s Landmark Hotel.
“Whether this means a bank temporarily moving a worker to an office in Germany or a lawyer visiting a client in Paris, we believe it is in the interests of both sides to see this continue.”