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According to The Financial Times The City of London has given up hope of universal access to the EU single market and is now seeking a bespoke deal for its different sectors to trade with Europe, with similar but stronger ties than Switzerland.
The financial sector in London has worked hard to present ideas to prime minister Theresa May but the City seems to have come to the conclusion that a deal for the UK to emulate Norway’s relationship with the EU is very difficult both politically and practically. Norway has access to the single market but no say in how regulations are set. It must both accept free movement of people and make budgetary contributions. Switzerland has another trade deal that give some sectors, such as insurance, full two-way access to the single market via a so-called passporting deal in return for keeping its regulation at an equivalent level to that in the bloc. Swiss banks do not benefit from any such trade deal, meaning they must do most of their EU capital markets business from their London subsidiaries. But the City, which was overwhelmingly in favour of remaining in the bloc before the June 23rd referendum, will argue that because the UK is the biggest export market for the rest of the EU it should be able to negotiate a “Swiss Plus” agreement.
But even that could prove difficult to obtain, even in a world where financial and business flows are deeply global and interconnected, becaus it is critical for passporting to be maintained and that requires some element of regulatory equivalency. This means that the UK, even if it could obtain in some way or another a “special status”, can not “cherry pick” its position. The biggest fear for many City corporates is that financial services could face a “cliff-edge” moment if the UK leaves the EU without a trade agreement in place, cutting off access to the single market overnight. This has prompted some to call for a transition agreement to allow more time for groups to adjust.
This also means that it is extremely important for financial companies to stay connected with Europe. Which better way to do so, than via a registered office address in Brussels? HDS can offer all corporate solutions that are needed in that respect.