Sunday

14th Apr 2024

EU to exclude financial services from post-Brexit deal

The EU intends to exclude the financial services sector from a trade deal with the UK after Brexit, according to the latest tweaks in the EU's draft negotiating guidelines.

EU citizens must also be granted permanent residency in the UK after 5 years of living there.

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The new text spells out that any free trade deal that would allow the City of London, Europe’s leading financial centre, continued access to EU markets would require that Britain continues to respect the EU's regulatory and supervisory standards.

It serves a blow to British prime minister Theresa May, who has called an election for 8 June. In the letter she sent to the EU to notify UK's exit, she argued for an ambitious free trade agreement that covers financial services.

However, France, Germany and other countries are looking to attract financial companies to Paris and Frankfurt, and other cities once the UK leaves the single market with Brexit.

An earlier version only said that the future trade agreement should "not endanger financial stability in the Union and encompass safeguards against unfair competitive advantages".

The new line was agreed by EU advisers to head of state and governments on Monday (24 April) in a preparatory meeting ahead of the Brexit summit on Saturday (29 April), according to Reuters.

In another change in the draft guidelines, the EU wants to secure the right to acquire permanent residency in the UK for EU citizens who have continuously lived in the UK for five years, Bloomberg reported.

The EU has already said in its guidelines that "agreeing reciprocal guarantees to safeguard the status and rights derived from EU law" for EU and UK citizens caught up in the process "will be the first priority for the negotiations" for the bloc.

The new draft of the EU 27 will be discussed at a political level by European affairs ministers on Thursday, for a final preparation of Saturday's summit.

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The European Commission says that Brexit and the loss of the City of London, the EU's main place for finance, is a reason to accelerate the integration of the bloc's financial markets.

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