EU humiliated as bid to ‘punish’ Britain for Brexit backfires – ‘Lost market share!’
Brexit: UK removing 'unnecessary EU laws' says expert
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Britain and the EU have very similar financial regulations and after Brexit the UK granted European firms equivalence, or equal access, in a range of areas. However Brussels refused to reciprocate creating a major challenge for British banks.
However according to Nikhil Rathi, who runs the UK’s Financial Conduct Authority (FCA), this decision may backfire on the EU.
He also insisted Britain will not seek equal European financial market access at any price.
Instead Mr Rathi suggested the UK will use post-Brexit freedoms to make its financial services more efficient.
During a speech to the Association of Foreign Banks he commented: “EU banks are now no longer able to offer to their clients full access to all pools of global liquidity for the trading of interest rate swaps and certain credit derivatives, as UK venues have retained material market share in various products.
“This loss of access to liquidity reduces competitive choice in the market for UK and rest of the world clients and, unsurprisingly, it has been reported that some EU banks have lost market share in these market segments.
“This means higher costs for EU firms, with a direct impact on the prices they can offer to their clients.
“And inevitably, UK and rest of the world clients, are left with no choice but to plan for further contingencies in which EU firms are unable to service a wider range of their needs.”
Whilst Britain officially left the EU in January 2020 it remained closely tied to the bloc until December during the Brexit transition period.
During this time it remained part of the European single market, including for financial services, and continued to implement many Brussels made laws.
Boris Johnson’s new Brexit trade deal replaced this arrangement from December 31.
However the deal mostly dealt with trade in goods, rather than services, offering a challenge to the UK’s financial sector.
Since Brexit banks moved £1.3 trillion worth of assets from the UK to the EU.
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Amsterdam replaced London as Europe’s biggest share trading hub.
However Mr Rathi insisted Britain will not “target equivalency at any cost”.
Instead the focus will be on “increased flexibility” with post-Brexit reforms.
He added: “We will use our autonomy to regulate for the benefit of UK financial markets and consumers.”
According to TheCityUK, an industry body, financial service exports are worth £56bn to the British economy.
As part of Mr Johnson’s Brexit deal some customs checks have been introduced on trade between Northern Ireland and the rest of the UK.
This has infuriated unionists who fear it will undermine the union.
A wave of loyalist rioting last month was blamed in part on anger at this issue.
The EU was determined to avoid any checks on goods travelling between Northern Ireland and the Republic of Ireland.
It argued this would undermine the Good Friday Agreement which brought decades of conflict to an end.
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