Theresa May still looking for a special relationship with US for London banks

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The British government, in a plan unveiled Thursday, is considering a new special arrangement for the country's large financial sector after Britain leaves the European Union next year. It remains to be seen, however, whether the block officials will accept the proposal.

In the new plan, British Prime Minister Theresa May abandoned earlier hopes of a so-called "mutual recognition" of financial regulations between the United States. Kingdom and Europe. This would have allowed the London banks to continue to operate with Europe in the same way as they currently do.

The government's argument for this approach: the financial sectors of Britain and the bloc are so linked that it would financially damage both parties if regulatory hurdles impeded their operations. But the European Union argued that Britain should not benefit from special treatment if it refused to abide by the rules of its single market.

Instead, it suggested that UK banks be treated according to "equivalence arrangements". the union's financial markets for so-called third country partners. This includes the United States.

Brexit 's new proposal seeks a common ground, so that UK banks are allowed to operate under a sort of broader equivalence agreement. This, suggests Ms. May, would allow UK banks to have better access to European Union markets, as well as regulatory and prudential cooperation with the bloc.

It remains to be seen whether the European Union will accept such a proposal. Michel Barnier, Chief Brexit Negotiator of the bloc, suggested that regular equivalence arrangements should be good enough for British banks

"Why the equivalence system, which works well for the UK. US industry, does not work for the city? " he asked in April.

He may have a point. UK banks may find that their operations are not so much affected by equivalence. But for Ms. May, a special relationship between the financial sectors in Britain and the European Union seems to be something she does not want to give up. The negotiations will test its determination.