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By Huw Jones and Carolyn Cohn
LONDON, Feb 26 (Reuters) - Britain will likely secure only
temporary access to the European Union financial market under a
broader trade deal in which finance may take a back seat to
sectors such as fishing, financial industry officials said on
Wednesday.
Britain and the EU start talks next week on a trade deal
that would come into effect next January after the "standstill"
transition period that followed Brexit last month expires.
Europe is Britain's biggest market for financial services
exports, worth about 26 billion pounds annually, and access to
the bloc would be under the EU's "equivalence" system.
This refers to UK rules effectively staying largely aligned
with those in the bloc. It offers much patchier access than at
present, and can be cancelled within 30 days in some cases.
Britain is already technically equivalent but this does not
mean equivalence would be switched on and that there could be
conditions and trade-offs with other economic sectors, Stephen
Jones, chief executive of UK Finance, a banking industry body,
told a House of Lords committee.
"If an equivalence designation can be granted, it is likely,
I would suggest, to be temporary in almost every case, and it is
likely to be capable theoretically of being withdrawn at short
notice," Jones said.
"On that basis, businesses will then have to decide whether
(that is) an adequate and robust basis on which to rely on."
UNLOVED SECTOR
EU equivalence assessments are separate from the trade talks
but will be taken into consideration, EU officials have said.
The bloc wants access to UK fishing waters, raising the
political temperature in Britain.
"Financial services are more important to us than them,
there's a potential oppportunity for them to extract other
concessions from us," Bruce Carnegie-Brown, chairman of the
Lloyd's of London insurance market, told the lawmakers.
The financial sector was in a "bad place" due to the
financial crisis, which makes it harder for politicians to
defend it, Carnegie-Brown said.
"There is some risk that because of its complexity and the
fact that it is hard to touch, that the much more tangible
issues of things like fish and motor cars are more real for
people in terms of Brexit impacts than financial services are."
Banks that use London as a gateway to the EU have opened
hubs in the bloc and the hit to UK tax revenues could be 3-5
billion pounds in the short term, Jones said.
Obtaining equivalence for wholesale financial markets should
be a priority given that it would outweigh any benefits from
diverging from the bloc's rules, Jones said.
"We don't aspire to strike out on our own unless we want to
be isolated," Jones said.
(Reporting by Huw Jones
Editing by Gareth Jones)
