UK warns EU of tit-for-tat measures over financial services regulations post-Brexit
UK negotiators warned Brussels that about 7,000 European-based investment funds could be under threat if the bloc refuses to change its position on the City of London after Britain’s exit from the European Union.
The implicit threat to the EU’s interests was made by a delegation to Brussels led by Katharine Braddick, the Treasury’s director-general for financial services to the European Commission’s negotiators last week, the Guardian reported.
The UK requests that all sectors of the City of London continue to operate after Brexit as they do today or European investment funds could face similar obstacles in the British market.
Currently, the EU proposes an “equivalence regime” which is applied to US financial services. The British government argues that the system does not cover enough sectors to provide assurances to UK-based banks and fund managers.
Stephen Jones, the chief executive of UK Finance, said: “It is encouraging to see both sides making progress on discussions over future market access and agreeing on the need for close regulatory co-operation, which is crucial for our shared financial stability.”
If the UK follow the EU’s model and does not grant the 7,000 EEA-domiciled funds easy access to the British market, there could be a three-year buffer to allow them to make necessary changes to their operations under current plans.
A government source told the Times: “This was not intended as a threat. Rather, we wanted to set out what both sides could lose if we don’t get a good deal, and it was received in that spirit.”