BoE will allow European Union banks to operate as normal after Brexit

BoE will allow European Union banks to operate as normal after Brexit

Kerry Wise
December 21, 2017

Given that Theresa May plans to trigger Brexit in March 2019, it means the United Kingdom would have less than two years to prepare for a full exit and complete a future trade deal with the bloc.

The European Commission said Wednesday that it is open to a transitional period that will help Britain ease out of the European Union.

City of London policy chairman Catherine McGuinness called the proposals a "welcome bit of news to end the year for the City", with European Union banks playing a significant part in Britain's success in the industry.

The cabinet did not discuss the stance of European Commission chief negotiator Michel Barnier whose vision of a trade agreement similar to that struck with Canada in 2016 differs sharply from Mrs May's demand for a bespoke United Kingdom deal delivering a "deep and special partnership".

Prime Minister Theresa May has asked for an "implementation period" of two years after the final Brexit deadline of March 2019, but many businesses say they need at least three.

The apparent concession marks an important move to reassure the City that it will be business as usual after Brexit and that the authorities intend to make it as easy as possible for foreign firms to operate, according to unnamed sources cited by the BBC.

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This would coincide with the end of the EU's seven-year budget for 2014 to 2020, he said, avoiding potentially thorny negotiations on how much Britain should pay for the extra few months in 2021 that would be necessary under May's proposal.

But the precise terms of the transition phase are the subject of the next set of negotiations.

However, the PM said the United Kingdom was in a unique position to do a quick deal as a current European Union member with trade arrangements already in line with Brussels.

"The transition period is useful and will enable Britain to get prepared for the kind of challenges that they will have to face, and to prepare also for the complications of the new relationship", Barnier told a press conference in Brussels as he unveiled new Brexit negotiating guidelines.

He also revealed the Bank's plans are based on agreement being struck on a transition period by the end of the March next year.

May has already accepted in theory the continued jurisdiction of the ECJ and that London will have no legal basis to conclude its own trade deals during the period.