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The UK Financial Services Industry Left Out of EU Talks

Negotiations have begun between the UK and EU on the terms of their future relationship. However, it has been confirmed that the country’s huge financial services sector will not be a major discussion point.

The Full Details  

Talks on the future of the trading relationship between the UK and the remaining EU countries started this week in Brussels. This should help to define many issues, but not that of the financial services industry. 

It is Britain’s biggest and most important sector. Therefore, the UK’s leaders have been trying to get some form of agreement in place. EU negotiators have consistently rejected the idea of discussing this industry. Currently, London in particular carries out a key role in offering a wide range of services to the rest of Europe. 

British negotiators are keen to retain as much of that clout as possible. The loss of this huge market could have a big effect on the UK economy. Companies that are currently struggling and looking at contacting a debt collection agency will already be casting worried glances at the future.

What Will Happen Next?

Despite the best attempts of the UK, there will be no direct negotiations between the interested parties on the subject of the future of financial services.  Instead, the EU negotiators have managed to put British services in the same position as those from any other country looking to enter the common market.

This means that the EU will decide whether or not British services are robust enough to be offered across the EU. If they are, then the EU will decide the terms under which they could offer British firms the right to operate there.  

What Are Equivalence Rights?

One of the key phrases in this subject is equivalence rights. This is the phrase that is used to describe the right for non-EU companies to offer their service to member states. There are currently less than 50 equivalence rights in their financial services legislation. 

The next step is for both parties to carry out their own assessments on the subject. It has been agreed that this will be done by June of this year, which is why this matter isn’t considered to be part of the current negotiations in Brussels.

One of the potential issues for British firms is that these equivalence rights can be withdrawn by the EU at short notice. This can be done with just 30 days’ notice, which is something that has happened in the past.

It could prove to be a huge sticking point, as British firms want a more structured way of ending these rights, to ensure a higher degree of confidence in the system. On the other hand, it seems unlikely that Brussels will accept this sort of proposal.

It is believed that EU officials are extremely wary of the possibility of allowing any changes to these rights that could give British financial services companies an unfair advantage.

While this subject is outside of the scope of the negotiations that are going on, it has been suggested that the UK’s hurry to get something suitable agreed could give the EU extra leverage to use when discussing other matters.