The Financial Times relies on an unreleased briefing paper while revealing the UK’s starting position during the City of London’s equivalence negotiations with the EU. The news mentions that the document said Sajid Javid, the chancellor, would seek as his opening position a full chapter on financial services in any free trade agreement, with “comprehensive, permanent equivalence decisions”.
Key quotes
The British government is demanding the EU sign up to a “permanent equivalence” regime for financial services that will last for “decades to come” to ensure the City of London can maintain access to the European market after Brexit.
Mr. Javid also warned that some parts of the City would diverge from existing Brussels rules in a move that could lead to accusations that Britain is trying to ‘cherry-pick’.
Mr. Javid explained his thinking in more detail in an opinion article due to be published on Tuesday in City AM, the London-based financial newspaper, a version of which has been seen by the FT.
The EU can currently revoke equivalence agreements at very short notice — in some instances as little as 30 days.
The negotiating stance appears to be a response to escalating fears among UK financial services executives that the EU could easily revoke equivalence agreements after Brexit, leaving them scrambling to service European clients.
FX implications
News like this adds to the Brexit uncertainty but has a little market reaction so far with the GBP/USD pair being modestly weak while taking rounds to 1.2915. The reason could be traced from Japan off and China’s coronavirus.
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