EU likely to grant the City limited equivalence, says French minister
The EU may grant the City limited access to its financial services market to allow the UK to do business across the bloc, a French minister has said.
A minister close to Emmanuel Macron, Clement Beaune said Brussels may be able to grant limited equivalence by the middle of the year.
Speaking to Bloomberg he said: “There will probably be partial equivalence, probably by the end of the semester.”
He added the City’s access will not be the same as before: “[It] will be revocable, provisional, unilateral on the part of the EU. So it is not the same legal framework at all”.
The progress on the equivalence deal differs from previous comments made by Beaune and Michel Barnier, the EU’s Brexit negotiator, who warned Brussels won’t be rushed into granting the City access to the market.
The UK has grown increasingly frustrated over the bloc’s reluctance to grant equivalence.
Earlier this week Bank of England governor Andrew Bailey said the EU was looking to implement “location policy”. In a stark warning he said any move to force banks to move clearing activity to Europe would be a “serious escalation” of UK-EU tensions.
There have been just two areas out of 40 that the EU has granted equivalence for post-Brexit. The UK’s derivative clearing houses were given permission to continue to operate in the EU on a temporary basis until June 2022 to secure financial stability post-Brexit.
Bailey said if the EU does not extend clearing house equivalence beyond June 2022 then about 25 per cent of Euro derivative clearing to the EU would be forced to move. The other 75 per cent would likely stay in London because it’s done by non-EU institutions.
“To get the other 75 percent would require something controversial, such as an attempt of territorial legislation or an attempt to cajole dealers and banks to say there will be a penalty unless you move this activity into the Euro area,” the governor said.