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May to seek City 'wish list' deal on Brexit financial services

May to seek City 'wish list' deal on Brexit financial services

The UK will seek an ambitious ‘mutual recognition’ deal governing European financial services following Brexit, cabinet sources have told the Financial Times.

The agreement would effectively leave cross-border trade in the sector close to unchanged under a mutually-agreed and monitored recognition of regulatory alignment.

Three senior figures close to Brexit negotiations said the government had won agreement from Mark Carney, who as head of the Bank of England is responsible for macro-prudential regulation, and chancellor Philip Hammond, who is expected to endorse the idea in a speech next week.

Head of The City UK lobbying group Miles Celic said that the plan, if realised, would closely match the body’s wish list. ‘This has been our plan A, plan B and plan C for about 12 months or more,’ he said.

The proposal is likely to run into a wall of resistance from EU negotiators, however.

‘Where allowed by our legislation, we will be able to consider some of the United Kingdom’s rules as equivalent using a proportionate and risk-based approach,’ head negotiator Michel Barnier said last month.

Equivalence is legally distinct from mutual recognition and much less comprehensive, covering only around a third of the volume of financial service trade between the UK and the rest of the EU, and can be unilaterally annulled with 30 days notice.

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