As the United Kingdom’s departure from the European Union draws near, discussions surrounding the future of financial services have become increasingly urgent. The EU’s stance on allowing UK-based financial firms access to its markets has been clear – it is considered a “hanging offense” for any member state to negotiate individual deals with the UK. However, with the potential of a no-deal Brexit looming, could some EU countries be tempted to break rank and hash out side deals with the UK?
Since the UK’s decision to leave the EU was first announced, there have been concerns about the impact it would have on the financial services industry. London, as one of the world’s leading financial hubs, has benefited greatly from being a part of the EU, with many major banks and financial institutions choosing to base their operations in the UK. However, with the UK’s departure from the EU, these institutions could potentially lose their passporting rights, which allow them to provide services across the EU without having to establish a physical presence in each member state.
The EU’s current stance on financial services in the Brexit negotiations has been to offer “equivalence” to the UK, meaning that UK-based firms would only have limited access to the EU market and would have to comply with EU regulations. This has been seen as a major blow to the UK’s financial services industry, with many fearing that it would result in a loss of jobs and a decrease in investment.
However, as the deadline for Brexit draws closer, some EU countries may be reconsidering their hardline stance on financial services. Recently, it was reported that Germany and France, two of the EU’s largest economies, have been in discussions with the UK about potential side deals for the financial services industry. This has sparked speculation that other EU countries may follow suit and try to secure their own individual agreements with the UK.
So, why would some EU countries risk the wrath of Brussels by negotiating side deals with the UK? The answer lies in the importance of the financial services industry to their own economies. London is not only a vital hub for financial services in the EU, but also for the global economy. Any disruption to the industry could have far-reaching consequences, not just for the UK, but for the entire EU.
Furthermore, with the possibility of a no-deal Brexit, some EU countries may be looking to protect their own interests and ensure that their financial firms can continue to do business with the UK. In the event of a no-deal, the UK would no longer be bound by EU regulations, giving it more flexibility in its dealings with other countries. This would make it an attractive partner for countries looking to maintain a strong relationship with the UK and its financial services industry.
Of course, the idea of individual side deals with the UK has been met with strong opposition from the EU. In a recent statement, European Commission President Jean-Claude Juncker reiterated that any side deals with the UK on financial services would be considered a “hanging offense”. This tough stance is meant to discourage other EU countries from breaking ranks and negotiating their own deals, in order to maintain a united front in the Brexit negotiations.
However, as we have seen in the past, the EU is not immune to making exceptions and bending its own rules. With the potential consequences of a no-deal Brexit looming, it is not unthinkable that some EU countries may be willing to take the risk and negotiate side deals with the UK. After all, the EU’s own financial stability could be at stake if the UK’s financial services industry were to suffer a significant blow.
In conclusion, while the EU’s current stance on financial services in the Brexit negotiations is a tough one, it is not impossible to imagine that some EU countries may be willing to break rank and negotiate individual deals with the UK. The importance of the financial services industry to both the UK and the EU as a whole cannot be underestimated, and it is in the best interest of all parties involved to find a mutually beneficial solution. Let us hope that the negotiations between the UK and the EU will result in a positive outcome for both sides, and that the financial services industry can continue to thrive in a post-Brexit world.
