The European Union (EU) Withdrawal Agreement has been a hot topic since the United Kingdom (UK) voted to leave the EU back in 2016. One of the key areas of concern for both the UK and the EU has been the future of the financial services industry.
The financial services sector is a crucial component of both the UK and the EU economies. The widespread integration of financial markets across Europe means that any disruption to the sector could have far-reaching consequences. This has led to intense negotiations between the two sides over the terms of the UK`s withdrawal from the EU.
The withdrawal agreement covers a range of issues related to financial services, including access to the single market, regulatory alignment, and the treatment of financial services firms based in the UK. The key provisions of the agreement are as follows:
– Transition period: The UK and the EU agreed to a transition period that would last from the date of Brexit until the end of 2020. During this period, the UK would continue to have access to the single market, and regulatory alignment would be maintained. This would give financial services firms time to adjust to the new regulatory regime.
– Equivalence: The concept of equivalence allows financial services firms based outside the EU to access the single market if they comply with EU regulations. The withdrawal agreement includes provisions on the assessment of equivalence, which would allow UK-based firms to access the single market after Brexit.
– Passporting: Passporting is a system that allows firms based in one EU member state to provide services across the EU without the need for further regulatory approval. The withdrawal agreement includes provisions that would allow UK-based firms to continue to use passporting during the transition period. However, after the transition period, passporting would no longer be available, and UK-based firms would need to rely on equivalence.
– Regulatory cooperation: The withdrawal agreement includes provisions on regulatory cooperation between the UK and the EU. The aim is to ensure that there is ongoing alignment between the two sides, which would help to prevent regulatory divergence and maintain a level playing field.
The financial services industry has been closely monitoring the progress of the negotiations between the UK and the EU. The industry has stressed the importance of maintaining access to the single market and regulatory alignment. The provisions of the withdrawal agreement relating to financial services have been welcomed as an important step towards achieving this goal.
However, the future of the financial services sector remains uncertain. The outcome of the ongoing negotiations between the UK and the EU on the future relationship will be critical. The industry will be hoping that future agreements will build on the foundations established by the withdrawal agreement to ensure continued stability and growth.