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A combination of politics around trade talks, EU concerns about Britain diverging from continental rules and Europe’s push for greater control of euro-denominated activities has left the sector facing unanswered questions about its operations after January 1.
With both sides refusing to give ground on vital issues and financial services left outside the scope of Brexit talks, executives fear the lack of clarity could lead to market dysfunction and inflated costs for clients after a year in which coronavirus has taken its toll. “This is the period of peak uncertainty,” David Schwimmer, chief executive of London Stock Exchange Group, told the Financial Times. “It looks like the EU will make sure there is a cost to Brexit, but it’s really important for global business to be able to participate in the biggest markets,” he said. “Less fragmentation and more co-operation and continuity of service are in everyone’s interest.”
Unlike most other main economic sectors, financial services has largely been left out of trade talks about the EU and UK’s future relationship, despite its importance to the British and European economies. The EU rejected UK proposals to include a detailed financial services chapter, covering issues such as regulatory co-operation, in any trade deal, arguing that it might turn into a British attempt to retain market access by the back door. Some firms have plans in place already but there are many who think something will come along at the last minute Sam Tyfield, Shoosmiths The exclusion means banks, exchanges and other parts of the City — as well as international lenders with trading outposts in London — are counting on a series of ad hoc, last-minute arrangements and changes....