UK Prime Minister Boris Johnson, in an interview with the Sunday Telegraph, has admitted that the Brexit deal agreed with the EU “does not go as far as we would like,” for the financial services sector, which is the largest in the UK economy.
Cyprus is also a major trading partner in financial services to the UK. The Brexit deal poses challenging questions to the sector in Cyprus.
Brussels has made clear the UK will need to wait until after January 1 to learn what market access rights its financial services companies will have in future.
There is no decision on so-called equivalence, which would allow firms to sell their services into the EU’s single market from the City of London. The agreement only features standard provisions on financial services, meaning it doesn’t include commitments on market access.
Under the current agreement, the UK has far more restricted rights to market access than competing financial centres Singapore and New York. The equivalence system — which Brussels already uses with other non-EU financial centres — does not cover all financial services and allows access rights to be withdrawn at just 30-days’ notice.
The Treasury is due to negotiate a memorandum of understanding with the EU as an urgent priority in 2021 and London will continue discussions with Brussels over access and equivalence for financial services, Chancellor of the Exchequer Rishi Sunak said in a televised statement on Sunday.
Sunak took an optimistic view in the statement, claiming that Brexit offers Britain a chance to do things differently in financial services.
“Now that we’ve left the European Union, we can do things a bit differently (in financial services),” Sunak insisted.
“But this deal also provides reassurance because there’s a stable regulatory co-operative framework mentioned in the deal, which I think will give people that reassurance that we will remain in close dialogue with our European partners when it comes to things like equivalence decisions.”