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UK-EU negotiations continue; and post-Brexit financial services outlook

Publish Date 29 Jul 2020
Categories Brexit Bulletin

Michael Gove updates Parliament on the negotiations

Michael Gove wrote a statement for Parliament to provide an update on the intensified talks that took place in Brussels between 29 June and 2 July led by UK Chief Negotiator David Frost. The talks include ed trade in goods; trade in services and investment; fisheries; horizontal arrangements; level playing field for fair competition; social society and thematic cooperation, and; energy and transport. Gove stated that the talks were “comprehensive and useful” but underlined the significant differences that continue to remain on a number of issues.

EU Chief Negotiator’s speaks about progress of financial services negotiations

Michel Barnier delivered a speech on the progress of the negotiation in relation to financial services, particularly on equivalence decisions. The speech made ahead of the UK’s earmarked September deadline for agreeing a new trade deal. Barnier’s speech commented on various elements of the UK’s proposals for financial services. On regulatory autonomy, Barnier said the UK had made “unacceptable proposals” that sought a legally enforceable cooperation framework; to limit the scope of “prudential carve out” and; to make unilateral decisions on withdrawing equivalence. On Single Market interaction, Barnier stated that he believed the UK aimed to make it “easy to continue to run EU businesses with minimal operations and staff” in the EU and that the EU had to capture all potential risks as the UK will “progressively diverge” from the EU framework. HM Treasury reiterated, in its response, that the UK was committed to completing equivalence assessments ahead of the summer and that the UK and the EU were starting from similar financial positions. It also published various documents detailing proposed amendments to the Financial Services Bill.

UK to negotiate a bilateral financial services agreement with Switzerland

On 30 June, the Chancellor, Rishi Sunak and Head of Switzerland Federal Department of Finance, Ueli Maurer, signed a joint statement committing to building an ambitious “outcomes-based” bilateral financial services agreement between the UK and Switzerland, post-Brexit. The Chancellor said “ the UK financial sector is integral to the success of the British economy” and that leaving the EU meant the UK could be driven by its own values. The Chancellor also announced that the Treasury had completed its equivalence assessment of Swiss stock markets, deeming them equivalent. The details of the agreement will be discussed over the coming months ahead of the UK/Swiss Economic and Financial dialogue timetabled for September.

AFME calls for progress on UK-EU relationship for financial services

The Association for Financial Markets in Europe published a paper urging the EU and UK to make new progress on the negotiation for financial services, including making firm equivalence decisions and the necessary arrangements to ensure that financial services continue to have a stable long-term market access with minimal potential disruption. The paper highlighted that the continued uncertainty around Brexit, combined with the adverse effects arising from COVID-19, had the potential to exacerbate risks at the end of the transitions and increase disruption in the markets. The paper also outlined the regulatory challenges for financial services that should be addressed at the end of the transition period, including the implementation of MiFID.

David Frost becomes National Security Adviser

The current UK Chief Brexit Negotiator, David Frost, has been appointed as National Security Adviser to replace Sir Mark Sedwill. Downing Street confirmed that David Frost’s role as Chief Brexit Negotiator has been merged into his new role and he will remain in charge of UK-EU negotiations as they progress.

Please feel free to contact the Policy Team for further information on any of the matters raised in this update.