EU ‘not punishing’ UK financial services sector, London envoy insists


Brussels is “not punishing” the City of London by withholding key regulatory rulings that would allow UK financial services firms to serve customers in the EU, the bloc’s ambassador to Britain has claimed.

João Vale de Almeida said Brussels was waiting for more information from the UK before deciding whether British financial services regulation should be deemed “equivalent” to the EU’s rules.

Britain has argued that its rules are, by definition, equivalent, given that the UK only left the European single market on January 1. The EU, however, said it wants details of Britain’s future regulatory plans.

Mr Vale de Almeida insisted the EU/UK trade deal did offer some help to financial services companies: he said they were free to establish in each other’s territories, so there was “no protectionism”.

Many City firms have set up operations in the EU to carry on serving customers in the single market, in the absence of equivalence rulings that would allow cross-border trade.

“There is no punishment,” Mr Vale de Almeida told the Ludgate Lecture organised by Bright Blue, a think-tank. “We are waiting for more elements from the UK.”

The British government has already submitted 2,500 pages of answers to Brussels about its regulations covering banks, insurers and other financial firms.

Allies of prime minister Boris Johnson believe the EU is trying to make the City wait nervously, hoping to lure more jobs and capital to other European financial centres, including Paris.

Both sides are aiming to agree a memorandum of understanding by March on regulatory co-operation, but that does not guarantee that Brussels will grant equivalence rulings.

Mr Vale de Almeida said he hoped Britain and the EU would forge a strong commercial, security and diplomatic partnership in the years ahead, declaring: “There is life beyond Brexit.”

Meanwhile Mr Johnson has confirmed he will offer £23m in compensation to cover post-Brexit disruption to sales of British fish and shellfish to the European market.

The addition of new regulations covering exports of seafood, particularly from Scotland and the south-west of England, has caused huge disruption to exports. Downing Street said the problems were “temporary”.

The Scottish National party said the package was nowhere near enough to compensate for what it said were more than £1m in lost daily sales for the fishing sector because of post-transition trade difficulties.

Meanwhile the European Commission announced on Tuesday that it was creating a new “service” within its bureaucracy to monitor the rollout of the trade deal. 

Brussels confirmed that Michel Barnier, the EU’s chief Brexit negotiator, would become a special adviser to European Commission president Ursula von der Leyen on UK matters.

Maros Sefcovic, one of the institution’s vice-presidents, will be the EU’s chief representative on the “partnership council” that will govern the implementation of the trade deal.

Video: How Brexit disruption will change London’s financial centres

One of the first items on the partnership council’s agenda will be a request from the EU to extend the period of provisional application of the trade deal beyond the end of February, allowing the European Parliament more time to scrutinise the text. 

Both the parliament and the bloc’s national governments have indicated that they are keen on an extension, which would allow the assembly to ratify the deal in March. 

But MEPs are also working on a back-up plan to vote around the end of February should the UK decline to grant more time, meaning that the deal is not in any danger. 


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