Michel Barnier the EU's chief Brexit negotiator on Tuesday dismissed the idea that UK will negotiate access to the EU for UK banks and financial services.
He pointed out that the EU would not open up financial services for negotiations, instead a so-called equivalence system will be used whereby EU regulators will dictate the standards that UK-based finance firms must uphold.
An equivalence approach poses significant problems for the UK's banking and financial services sector, which constitutes 6.9 per cent of GDP, employs around 1.1 million and added £132 billion to the UK's economy in 2018.
The implication of what Michel Barnier said is that the rules could change whenever the EU decides to, and regulators could at any time decided that a bank or any other financial institution does not meet the requisite standards and consequently suspend their operations in the EU.
It appears the UK will lose the EU's passporting system that allows financial institutions from the UK and other member states to operate within the bloc. Under the EU passporting system, authorised banks and financial services companies can trade freely in any EU or EEA state.
The new dispensation suggested by Barnier is a far cry from what Boris Johnson promised the country in 2016. He dismissed concerns about the UK losing its passporting rights, insisting that the UK's banks and financial services will have access to the EU and that London will remain a global financial centre.
It was the same Boris Johnson who said during the Brexit campaign that we could eat our cake and have it, that is, leave the EU but still strike the most fantastic deal with the bloc.
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