Whenever the ‘merits’ of aligning UK regulations with those of the EU after Brexit are discussed, the fate of the financial services sector features prominently.
I recently gave evidence to the House of Commons Treasury and International Trade Select Committee on the economic effects of trade policy. As written evidence, I submitted ‘Brexit and the City’ which considers various options.
The main choice is between equivalence and mutual recognition – and this would cover both the services themselves and the qualifications of those providing them. What is on offer during the transition period – as laid out in the Withdrawal Agreement signed on 25 November 2018 – is a very pale version of equivalence without any enhancements. However, in the absence of an agreed solution with the EU, there is growing support for World Financial Centre model, where the City ‘goes it alone’.
I discussed the following seven different possible models with the Committee.
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