John Garvey, the global head of financial services at 'Big Four' consulting firm PwC expects that the EU and UK will agree a post-Brexit deal for the financial services industry.
The Telegraph quotes Garvey as saying that the EU “needs London”, and although a deal is unlikely to happen in the short-term future, eventually the bloc will understand that an agreement is the best outcome for both parties.
Garvey said: “There’s going to be a strange relationship developing over time where the Europeans realise they need London. So, I think there will be some kind of deal because the continent will need access to the London market.”
EU commissioner for financial services, Mairead McGuinness, recently commented that the bloc is keen to open talks on equivalence but does not yet feel any pressure to kickstart discussions. She did, however, hint that talks between both parties on market access could begin by mid-2021.
Back in March, the UK and EU had agreed to a memorandum of understanding on post-Brexit regulatory cooperation, which was greeted warmly by the City of London. However, McGuinness also said that the process of finalising the memorandum was still ongoing.
City officials are hopeful that talks over the memorandum will be enough to prompt the bloc to begin talks with the UK on granting access to EU markets for British firms. The full enactment of Brexit at the start of the year saw the UK lose full access to EU markets, while the financial services sector was left largely unaccounted for in the Brexit trade deal that was agreed in December.
Yet, there is also clamour within the industry for the government to focus its efforts on getting firms access to markets outside of Europe, rather than making the EU market its priority.
Andrew Bailey, governor of the Bank of England, has also claimed that the EU is using equivalence as a weapon to lock an independently trading UK into its own regulatory systems, suggesting that the bloc is also unable to answer its own questions on where its financial centre should be as it vies to establish a greater financial market within the eurozone.
Bailey said: “None of those [EU] markets can decide what their financial centre would be and none of their governments are really comfortable shouldering the risk, particularly Germany.”
Recent reports have also found that pre-Brexit speculation of an exodus of jobs from London to Europe as a result of Britain leaving the bloc has thus far proven untrue.
New Financial has uncovered that 440 finance firms have taken business from Britain to the EU as a result of UK withdrawal. Elsewhere, 'Big Four' consulting firm EY has said that only 7,600 jobs have so far moved to Europe from the UK, a number which falls substantially below previous forecasts.