The United Kingdom is confident that it is on the verge of reaching an agreement with the European Union to give London’s vast financial center access to EU markets after Brexit, Britain’s financial services minister John Glen said on Monday.
Home to the world’s highest number of banks and largest commercial insurance market, the City of London and its sister district in Canary Wharf are scrambling to prepare for Britain’s departure from the European Union, the biggest challenge the UK financial sector has faced since the 2007-2009 financial crisis.
Britain’s financial services sector, the biggest source of its exports and tax revenue, has been struggling to find a way to preserve the existing flow of trading after it leaves the EU.
The government is looking for an improved form of the EU’s existing system of financial market access known as ‘equivalence’ – a basic form of market access dependent on rules being kept broadly similar and the basis for the EU’s relationship with countries such as the United States.
“I am extremely confident we will reach an imminent deal,” Glen told a financial services conference in London. “There is common ground. That is why we are increasingly positive on the expectation of reaching a deal.”
Talks over a broader deal are mired in a disagreement over an Irish “backstop” – an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not in place in time.
But negotiators are close to agreeing wording on financial services that would go into a declaration on future relations, which be included alongside any divorce deal, according to British officials.
Glen said EU politicians are increasingly worried about being cut off from Britain’s financial markets because all the other financial centers in Europe are smaller in size.
“Severing connections to our financial center is not in the commercial interests of any other European capital. It’s fair to say the overwhelming majority of European politicians share the same view,” he said.
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