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02 February 2017

The Brexit White Paper

The UK Government released its White Paper on what it wants to achieve during the negotiations for exiting the European Union - Graham Bishop comments on the specific objectives for financial services.

No plan of operations extends with any certainty beyond the first contact with the main hostile force”:19th century German General von Moltke

Prime Minister May is already running into some uncertainties with her internal enemies that are causing her plans to fragment before any contact with the external enemy across the Channel: Giving Parliament a vote on Article 50; publishing a White Paper; giving Parliament a vote on the final deal, with perhaps more to come.

The White Paper does not seem to add anything to the 17th Jan Lancaster House speech – at least in the financial services sector.  My comments on that speech are here.

Financial Services warrant a whole page – see the Appendix below. The key negotiating aim is in 8.25.”Inour new strategic partnership agreement we will be aiming for the freest possible trade in financial services between the UK and EU Member States.” As the Government is now completely committed to leaving the Single Market, it can only lamely note that “there are provisions” about equivalence instead. But there is no detail about how to extend these concepts to provide general access.

Perhaps the key sector will be `clearing’ of derivatives – see my short-version paper here – but the Eurozone will be keenly interested in how any systemic instability can be avoided in a crisis. The answer seems to be to “establish strong cooperative oversight arrangements” with the EU. What does this actually mean in a crisis? Will the Eurozone be able to force changes in the operations of entities in the UK?  YES: this would maintain the power of the ECJ over Britain. NO: why will `they’ be willing to run any risk of massive liabilities falling on their taxpayers from derivatives that exceed 50 times the UK’s GDP? [...]

Full article available for consultancy clients here

© Graham Bishop

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