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(Reuters) – British Prime Minister Theresa May has reached an agreement in principle with the European Union that would give British financial services companies extended access to European markets after Brexit, the Times reported on Thursday.
British Prime Minister Theresa May leaves 10 Downing Street in London on October 29, 2018, in Britain. REUTERS / Henry Nicholls
British and European negotiators reached an agreement in principle on all aspects of a future services partnership, as well as on data exchange, the British newspaper reported, citing government sources.
The services deal would give British companies access to European markets as long as UK financial regulation remains broadly in line with that of the EU, the Times reported.
The pound sterling jumped up to 0.5% against the dollar after the report.
Global banks operating in the United Kingdom had to reorganize their activities after the departure of Britain from the European Union, scheduled for next March. Many have set up new European hubs and have begun moving their operations, their top executives and their staff to ensure that they can continue to serve their continental customers if Britain leaves the bloc without any agreement.
According to the Times report, the EU will agree that the UK will apply "equivalent" regulation to that of Brussels, and UK financial services companies will be allowed to operate as they currently do in Europe.
EU officials have stated that the EU's financial market access system, known as "equivalence", under which Brussels grants access to foreign banks and insurers if their national rules converge with those of the block, is probably the best choice of Britain.
Equivalence has so far had only limited application because, under the existing rules, market access can be withdrawn unilaterally with one month's notice, the Times said.
Under the new agreement, "equivalence" will be extended and will fall under the governance of a broader trade treaty, allowing the EU and the United Kingdom to amend or change the terms of the agreement. Establish new financial regulations after consulting with them beforehand, the Times said.
May's top European advisor, Oliver Robbins, is continuing negotiations in Brussels, according to the report.
With five months to reach an agreement before Britain leaves the European Union, business leaders demand certainty as to the business conditions that divorce will impose.
The United Kingdom's Financial Conduct Authority wants Britain to remain closely aligned with the EU, but without Britain having to copy all the rules of the bloc, said the acting director of strategy for Britain. FCA, Richard Monks.
Britain said on Wednesday that there was no scheduled date for the end of Brexit negotiations, thus backtracking on a letter from Brexit Minister Dominic Raab suggesting that an agreement on the conditions of his departure from the European Union could be finalized by 21 November.
Report by Ismail Shakil and Ishita Chigilli Palli in Bengaluru; Edited by Leslie Adler and Grant McCool
