U.K banks risk losing their privileges to do business in the European Union, unless the government in London agrees to abide by financial regulation decided in Brussels even after Britain leaves the bloc, the head of the group of euro-area finance ministers said.
“It is unthinkable that the EU will allow U.K.-based financial institutions full access to do business in the internal market without a sustainable coupling of future dynamic U.K. standards to the EU framework,” Eurogroup chair Jeroen Dijsselbloem said in a speech Tuesday in Brussels. “At the same time I realize that, given the promise of full sovereignty, this will be a hard truth to accept in Britain.”
British Prime Minister Theresa May has signaled the U.K would attempt to lure companies and financial institutions with lighter regulation and lower corporate taxes if the EU offers a post-separation arrangement that isn’t acceptable to her government. EU officials have responded that such move would damage the prospect of getting a trade deal, while cautioning that far from regaining its legislative autonomy, the U.K. may end up being forced to comply with legislation on which it has no input.
Source: Bloomberg (25 January 2017)