UK and EU close to starting finance talks

Framework is likely to be adopted this month paving the way to possible deal

The European Union and the United Kingdom are close to agreeing a framework for future talks on financial services regulation and supervision, Mairead McGuinness, the bloc's financial services commissioner, has said.

McGuinness explained on the BBC's The Andrew Marr Show that the framework will likely be adopted this month, setting out the way in which talks between regulators from London and Brussels will be conducted.

On Monday, she was due to have talks with Andrew Bailey, the governor of the Bank of England, to assess progress made so far on how British financial services providers might be able to access the 27-member EU.

But McGuinness told Marr any new relationship between the UK and the bloc with regard to financial services will inevitably be inferior to the one they had before, when the nation was a member of the bloc.

"We will not be re-creating the conditions of the single market for the UK because the UK chose to leave," she said.

The Financial Times said an agreement on the framework for future talks on financial services access was a "minor step forward "after months of "acrimonious post-Brexit exchanges" on such things as the future management of imports and exports into and out of Northern Ireland, and the distribution of novel coronavirus vaccines.

But the FT said any deal between London and Brussels that allows British companies access to the bloc's markets will likely leave many major barriers in place.

Miles Celic, chief executive of TheCityUK lobbying group, told paper the establishment of a forum, described by some as a "talking shop" where the two sides can discuss financial issues will not necessarily help the situation, if the two sides are not genuinely seeking an agreement.

"It's not a substitute for a relationship built on trust," he said. "There's not much point if it's a forum for people to shout at each other."

Britain fully exited the European Union on Dec 31, and the UK's financial services companies were immediately severed from their largest export customer.

The comprehensive trade deal agreed between the bloc and the UK late last year did not include agreement on the financial services sector. Instead, it called for future talks to be held on how British companies might be able to access the bloc's market. That access will be contingent on so-called "equivalence" status being granted by the bloc to British financial services companies and the nation's regulations, something the bloc has not yet done and which some experts have predicted it is unlikely ever to do because of the bloc's desire to create a stronger in-house financial sector.

The Reuters news agency said McGuinness had described the framework for future talks on financial services access as an informal mechanism for discussing upcoming regulatory issues. The agency said the arrangement is likely to be similar to a mechanism the bloc has with the United States.