- REUTERS/Francois Lenoir
- Brexit Secretary David Davis says City of London will be granted a special travel regime after Brexit.
- The system is likely to allow financial services companies to move staff between EU and UK offices with ease.
- Davis also says that a transition deal will be agreed “very early” in 2018.
LONDON – The City of London will be granted a special travel regime once Britain leaves the European Union, which will allow bankers and other financiers to move freely around the continent, Brexit Secretary David Davis said on Tuesday evening.
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.”
Davis and his allies believe that such transfers of staff should be “treated differently” to other types of immigration, according to a report of the speech by the Financial Times.
Major financial institutions are currently making 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.
Numerous senior figures in the UK’s financial system, including several Bank of England policymakers, have warned that financial services companies desperately need at least some clarity on what Britain and the EU’s post-Brexit relationship will look like, or risk wholesale staff shifts.
Banks need to make final decisions about moving staff by the first quarter of next year at the latest. Banks need at least a year, if not longer, to set up fully functioning branches and subsidiaries in Europe to maintain uninterrupted EU activities.
Davis used his speech on Tuesday to attempt to provide some reassurance, saying that a transition deal with the EU will be agreed “very early” in 2018. “Boards have to meet their fiduciary duties and investors need to make decisions critical to the future of their companies. Without such an implementation period, some of these decisions would need to be taken in January 2018.
“That is why we want to agree this period as soon as the EU have a mandate to do so, which I believe can be done very early next year.”