From 31 December 2020 (when the Brexit transition period ends), the UK will be treated like any other “third country” if there is no Brexit trade deal for financial services, no concessions and no equivalence. This briefing nullifies the main effects. It is based on the situation provided for in the current British IS, which are prepared for such an emergency without agreement. 1 Financial services had the potential to be one of the most controversial and perhaps riskiest sectors in the Brexit negotiations. Admittedly, the evolution of Brexit at the time of the letter (mid-February 2019) remains fundamentally uncertain and there is a real possibility of non-agreement on Brexit at the end of March 2019. The likely impact of Brexit on financial services, however, seems pretty clear. There are obstacles that need to be overcome and some can still be difficult or even difficult to face. But fears of catastrophic outages, as outlined in other sectors such as food and pharmaceuticals in the event of a non-agreement, do not seem to threaten financial services, at least not yet. The United Kingdom is now highly dependent on financial services and, in many respects, is the engine of the British economy, which accounts for 6.9% of all UK economic activity. A banker at a major British investment bank said British lenders preferred a deal on investment banking activities, “because it would provide more security – both on where we would be on the first day of Brexit and on the security of long-term stability. Surprisingly, companies that remain for months before the end of the transition period are not clear about their ability to market and sell services in the internal market from 2021, as they have political quarrels over equivalence. In addition to an agreement on financial services, there are other issues that still need to be addressed by both parties, such as agreements on the use of data and mutual recognition of professional qualifications. Brexit highlights the many challenges facing investors, bankers, lawyers, accountants, IT specialists of asset managers who have made London their business centre and your homeland.
But Brexit is also a wake-up call for Uk regulators and policymakers – and the EU – to set a clear strategic direction for financial services. 3 This article begins with a look at some of the issues raised by a non-agreement crash. Key issues related to trade with the services sector are then discussed under WTO rules, before addressing the issue of equivalence, which should be the most central to future trade in financial services between the UK and the EU, regardless of the long-term trade agreements on which both sides ultimately agree.
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