08 July 2020

FT: Hardline Brexit stance threatens City market access, UK warned

Mr Gramegna said that even if EU-UK relations become more distant in the wake of Brexit, his aim was “to make sure that we still have a footbridge left”. “I think this would be in the interest of both sides,” he said. “But that can only be achieved if both sides have the will to do so.”

With Britain set to leave the single market at the end of its post-Brexit transition period, the EU and UK have agreed that future market access should be based on a system known as “equivalence”, where each side vets the rigour of the other's regulation and supervision. About 40 equivalence provisions are scattered in different EU financial regulations. They cover everything from credit-ratings agencies to swaps trading platforms and can be withdrawn at short notice.

During the Brexit talks, Britain has argued for trying to make the system more stable with “appropriate consultation and structured processes” before equivalence is withdrawn by either side. But Michel Barnier, the EU's chief negotiator, has warned that Britain's position is an attempt to “co-decide with the Union” in an area where the EU should be autonomous.

Underlining that he was not directly involved in the negotiations, Mr Gramegna said: “The United Kingdom is promoting an enhanced equivalence system which to a certain extent I can understand. On the other hand, I understand also the [European] commission saying we want to keep our independence in what we do.” But he added that the UK was pursuing objectives that were difficult to reconcile.

“The UK at the same time says ‘as soon as we will be out we will be 100 per cent sovereign again and be able to choose what we do with our own regulation’,” Mr Gramegna said. “That sounds to me in contradiction with the idea of having an enhanced equivalence. You cannot defend the two things in parallel.”...

More at FT £

© FT plc