CEPS' Director Karel Lanoo writes that the “equivalence” assessment allow much less access than UK-licensed firms enjoy today thanks to the EU's Single Market, but it could still provide a fairly bleak basis on which the City might continue to thrive as a global financial centre in Europe.
Lannoo opens his contribution by observing that it is understandable why the UK attaches immense importance to retaining access to the EU’s single market, given that financial services account for about 8% of the country’s GDP. He warns, however, that putting a mutually acceptable regime in place will take years of negotiations, and the final agreement will clearly allow much less access than UK-licensed firms enjoy today. He further finds that the “equivalence” assessment – the basic tool used under current EU financial services legislation to recognise that a third country’s legal, regulatory and/or supervisory regime is equivalent to the corresponding EU framework – offers a fairly bleak basis on which the City might continue to thrive as a global financial centre in Europe.
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