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City of London looks past single market post-Brexit

City of London looks past single market post-Brexit
Published by
The Week

2m read

9 August 8.41am

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by The Week.

Government 'considering leaving single market for first time' following Treasury talks with financial sector

According to the Daily Telegraph, the discussions have already led to the government "considering leaving the single market for the first time".

The paper says meetings have taken place that included the Chancellor Philip Hammond, David Davis's new Brexit department and financial sector lobby groups including the Confederation of British Industry (CBI), the British Bankers Association (BBA) and City of London Corporation.

Taking centre stage was the issue of "passporting" - the right for all firms based in the single market, covering the EU plus Norway, Iceland, Lichtenstein and Switzerland, to operate in all 32 countries while only registered and regulated in one.

This is seen to be a key reason for London's success in recent decades. Banking giants from the US in particular are able to benefit from the city's rich finance heritage, liquid markets and common language, while also getting easy access to the world's largest collective economy.

Without this right, it had been assumed that thousands of jobs, plus a large chunk of the UK's trade surplus and tax revenue, would move abroad.

Mark Boleat, the policy chief at the City of London Corporation, said: "What [the government] wants to know is: does Brexit mean the loss of five per cent of investment banking jobs? In which case - OK. If it means the loss of 30 per cent of these jobs, then what's the implication of tax revenue?

"Is passporting worth fighting for?"

The answer is yes, according to some of the lobby groups, but that the right should still be sought outside of the single market.

Anthony Browne, the chief executive of the British Bankers Association, said: "We are not calling for membership of the single market, what we want is full two-way access to EU markets.

"The so-called Norway option would provide greatest continuity for banks and their customers, because basically the current passporting regime would continue to apply. However, it would mean the UK has to accept financial services regulation that it has no control or influence over."

This would mean rejecting a Norway-style model in favour of the sort of bespoke bilateral deals done with Switzerland. But the UK would be seeking a more favourable arrangement still as Switzerland still has to comply with free movement laws.

Essentially, this would leave the UK demanding a deal advocated by many Brexiters during the referendum campaign: single market-style trading, without the associated obligations. That could prove to be a tough sell.

That's why many in the City, such as the CBI, and elsewhere across industry favour full single-market access, perhaps with a modest caveat on free movement like an "emergency brake".

This article was from The Week and was legally licensed through the NewsCred publisher network.

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  • 9 August 8.41am
  • 2m read

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Article originally published by The Week. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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