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Thursday, September 21, 2023

The EU will sign a post-Brexit deal on financial services, PwC boss predicts, because it ‘needs London’

The EU will grant the City of London access to its capital markets and agree a post-Brexit deal on financial services because it “needs London”, PwC has predicted.

The financial services sector was left out of the post-Brexit trade deal agreed between the two sides last year, but the Big Four firm is predicting the EU will come to its senses about London’s dominance and attractiveness eventually.

John Garvey, global head of financial services at PwC, told the Telegraph that although doesn’t expect a deal imminently, there will come a point when Brussels realises a deal is in its own interests.

“There’s going to be a strange relationship developing over time where the Europeans realise they need London,” he said. “So, I think there will be some kind of deal because the continent will need access to the London market.”

Since Brexit came into force, UK financial services firms have lost passporting rights, which let them operate within the bloc the same as they would in London.

And, although a Memorandum of Understanding on a financial services deal was agree in March, it stops short offering UK firms full market access to the EU so long as UK regulations stay roughly in-line with those from Brussels, known as equivalence.

Last week the EU indicated it was in “no rush” to grant the City of London renewed access to its financial markets post-Brexit, Mairead McGuinness said.

McGuinness, the European Commissioner for financial services, said Brussels will “not be recreating access to the single market for the UK as they have chosen to move out”.

“I know there probably is an appetite on the UK side for us to sit down and get going,” she said. “We are certainly very keen to do that, but we’re not under pressure to do it.”

City lobby group New Financial recently shared data which found that more than 440 finance firms have shifted some business to the EU due to Brexit, with Dublin emerging as the early winner.

However the predicted exodus of tens of thousands of City finance and banking jobs is yet to materialise, with EY recently reporting that around 7,000 roles have moved from the UK across the Channel.

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