- Thomson Reuters
- Lobby group TheCityUK disputes Emmanuel Macron’s claim that the UK must choose between full membership of the single market and a Canada-style trade deal which excludes financial services.
- “It’s absolutely right that most free-trade agreements don’t cover services, but that’s not a good thing, that’s a bad thing,” said chief executive Miles Celic.
LONDON – A lobby group representing Britain’s financial services disputed Emmanuel Macron’s claim that the UK must choose between full membership of Europe’s single market and a Canada-style trade deal which excludes financial services.
“A number of people have made similar comments [to Macron],” Miles Celic, chief executive of TheCityUK, told Business Insider. “Barnier said something relatively similar before Christmas. It’s absolutely right that most free-trade agreements don’t cover services, but that’s not a good thing, that’s a bad thing.”
French president Macron said last week that Britain can have “no differentiated access to financial services” after Brexit. “If you want access to the single market, including the financial services, be my guest. But it means that you need to contribute to the budget and acknowledge European jurisdiction,” he said.
He said the alternative to single-market was a unique deal, but one like that between the EU and Canada which does not include financial services. “If you want trade access, it can cover everything, but then it’s not full access to the single market and to the financial services, otherwise it’s closer to Canada’s situation,” he said.
“A degree of choreography and theatricality”
Celic suggested Macron’s words had carried a degree of “theatricality” associated with negotiations. “Possibly we need to aim off for a degree of the choreography and theatricality that comes in any negotiation,” he said.
TheCityUK has called since last year for an untested system of “mutual regulatory recognition” after Brexit, a system which Brexit secretary David Davis spoke about favourably at a speech in November.
Under that system, the EU and Britain would broadly accept firms in each other’s markets because their regulatory systems were broadly similar. There would likely be a dispute resolution authority which arbitrated when one system moved to diverge from another.
Celic said mutual recognition would dampen the impact of losing financial passporting rights when the UK leaves the single market. Passporting is a valuable system which allows UK-quartered banks to sell products and services to financial markets across the EU.
“The government has been forthright and crystal clear on this: The UK is leaving the single market,” he said.
“If we leave the single market, what goes with that is the passporting regime. Therefore the question is how you create something that captures the benefits of the passporting regime, which works well for both sides. We’d argue that mutual regulatory recognition allows for that,” he said.
The think-tank Institute for Government has criticised such an approach, saying it would be “unlikely to prove the magic bullet that allows the government to avoid the choice between domestic freedom on regulation and friction-free access to the single market.”