Europe

Brussels Rebuffs UK Post-Brexit FinServ Plan

Brussels has rejected the U.K.’s proposals on how to govern London’s access to the European market after Brexit.

According to the Financial Times, Brussels said that British Prime Minister Theresa May’s latest financial services plan would take away the EU’s “decision-making autonomy.”

The rejection comes after the U.K. government recently published its 98 page white paper on Britain’s future relations with the EU. The document detailed plans for an enhanced “equivalence” model, which would build on an existing system that countries like the U.S. and Singapore use to simplify their access to the bloc.

The U.K. white paper called for equivalence to be “expanded,” adding that it was “not sufficient to deal with a third country whose financial markets are as deeply interconnected with the EU’s as those of the U.K. are.”

Chancellor Philip Hammond noted that the country had given up on a more ambitious “mutual recognition” plan, and was looking for a better agreement than the EU’s existing equivalence model.

But sources said that Michel Barnier, the EU’s chief Brexit negotiator, told ministers that the plan would undermine the EU’s stance that equivalence decisions must be made unilaterally by Brussels, adding that it would amount to a “system of generalized equivalence that would in reality be jointly run by the EU and U.K.”

Speaking to reporters on Friday (July 20), Barnier did not outwardly reject the U.K.’s white paper, saying that Brussels would “constructively” engage with the proposals. He did admit that the document raised “many questions” that have not been answered by the Brits, including the U.K.’s plans to remain in the EU’s single market for goods while leaving it for services.

“In products that you use every day, like your telephone, between 20 to 40 per cent of the value of the product is linked to services,” Barnier said. “How do we avoid unfair competition on services?”

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