Rishi Sunak insisted that ‘significant progress’ has been made over a post-Brexit trade deal that remains within the UK’s grasp today – as he attacked Brussels over a lack of access for City firms.
The Chancellor said it was ‘clear that a deal can be done’ as he set out his plan to ‘renew the UK’s position as the world’s pre-eminent financial centre’ following Brexit.
But he took a swipe at Brussels as he revealed that he was taking unilateral action to allow financial services firms from the bloc to do business in a newly sovereign Britain.
He announced he was introducing ‘equivalence’ rules and bemoaned the failure of the EU to strike a similar deal for the City despite years of talks since the 2016 referendum.
Mr Sunak’s comments on Brexit came as Michel Barnier began a new round of talks with UK officials in London
The EU chief negotiator said this morning the EU and the UK are ‘redoubling our efforts’ to strike a post-Brexit trade deal amid signs Joe Biden’s US election win has sparked a fresh negotiating push.
Speaking this afternoon in the Commons, Mr Sunak said: ‘I think it wouldn’t be right of me to give a day by day commentary on the current negotiations.
‘But as we heard from the Prime Minister at the weekend we have made significant progress, those talks are ongoing, it is clear that a deal can be done.
‘But that will require both sides to continue to act in a constructive way and we remain ready to do that and are working hard at it.’
The Chancellor told MPs in the Commons that Britain would set out how it would let European Union financial services firms operate in Britain after the post-Brexit transition period ends on December 31
Michel Barnier, the EU’s chief negotiator pictured arriving for talks in London this morning, said there are ‘three keys to unlock a deal’ and the two sides are ‘redoubling our efforts’
The Chancellor told MPs in the Commons that Britain would set out how it would let European Union financial services firms operate in Britain after the post-Brexit transition period ends on December 31.
In a blunt assessment of the impasse with Brussels, he said it was now clear that there were ‘many areas’ where the EU was not prepared to even assess access to British firms.
He said that Britain would therefore make its own ‘equivalence’ rules for foreign firms – a recognition that EU supervision and regulations match those in the UK to allow companies greater operating certainty.
It came as he told MPs the Government planned to ‘renew the UK’s position as the world’s pre-eminent financial centre’ following Brexit.
Mr Sunak said: It is now clear that there are many areas where the EU is simply not prepared to even assess the UK, so we need to now decide on how best to proceed.
‘Of course we will always want a constructive and engaged relationship with the EU, but after four years I think it is time for us to move forward as a country and do what’s right for the UK.
‘To provide certainty and stability to industry and deliver our goal of open, well-regulated markets, I’m publishing today a set of equivalence decisions for the EU and EEA member states.’
London and Brussels are still locked in talks about a broad trade deal less than two months before the scheduled end to the transition period.
Access to EU markets for Britain’s huge financial services industry is being treated separately under the bloc’s equivalence system.
Brussels grants access to its markets if rules for foreign financial firms in their home country are deemed to be equivalent or as robust as regulation in the bloc.
Sunak said Britain would grant a package of equivalence decisions across a range of financial activities to the EU and member states of the European Economic Area, regardless of what the bloc eventually decides.
The Treasury said it was not ruling out further equivalence decisions if they were in Britain’s interests and it remained open to further dialogue with the EU.
Mr Sunak said he was setting out plans ‘to make this country more open, more technologically advanced and a world leader in the use of green finance’.
Last month furious business leaders accused officials in Brexit talks of complacency over the future of the City, while fiercely protecting Britain’s fishing rights.
With the end of the transition period looming, bosses of banks and insurance companies are worried about the failure to close in on a post-Brexit deal for the UK’s powerhouse financial services industry.
The sector employs more than one million people and contributes just over seven per cent of the UK’s entire annual economic output.
In contrast, Britain’s fishing industry accounts for just 0.1 per cent of GDP and employs around 24,000 people – but it appears to be the key sticking point in the UK’s negotiations with the EU.
Without a deal, financial companies such as banks, insurers and fund managers will lose unfettered access to EU markets and not be able to trade freely across the bloc.
With the Brexit transition period ending at 11pm on December 31, other financial centres such as Paris and Frankfurt are flexing their muscles to challenge London’s dominance.
The EU is Britain’s biggest financial services customer. Brussels has yet to say how much access the City of London will have from January under its ‘equivalence’ system, beyond temporary permission for UK derivative clearing houses.
The EU grants access for foreign financial firms if it deems their home rules to be equivalent or as robust as those in the bloc, a system Britain will also use for granting access to its financial markets from January.
Shadow chancellor Anneliese Dodds said the ‘elephant in the room’ is the Government’s mishandling of ensuring market access to the EU for UK firms.
She said: ‘While we debate these often welcome measures, we mustn’t forget the elephant in the room. This Government’s mishandling, I’m calling it that because that’s what it is, of ensuring market access for our firms to our largest trading partner.
‘One in every 14 UK workers are employed in financial and related professional services.
‘Yet the City of London Corporation recently said approaches to negotiations make them feel like the neglected child of an acrimonious divorce.
‘With weeks to go until we leave the transition period, we still don’t know whether the EU will determine that our rules are equivalent to theirs.
‘The Chancellor’s predecessor (Sajid Javid) said achieving equivalence on day one should not be complicated. The deadline for achieving equivalence was June of this year.’
The EU’s chief negotiator said he was ‘happy to be back in London’ as he arrived for talks this morning and set out ‘three keys to unlock a deal’.
He said the autonomy of the EU and UK sovereignty had to be respected, ‘robust guarantees’ must be agreed on fair trade and competition, and there should be ‘fishing opportunities in the interest of both parties’.
His comments came after Environment Secretary George Eustice hinted at a UK move on post-Brexit fishing rights.
Mr Eustice suggested agreements setting the ‘ground rules’ on access for EU fishing fleets could cover several years – an apparent shift from the demand that negotiations happen annually.
Boris Johnson yesterday insisted a trade pact with Brussels is ‘there to be done’ as he raised hopes of a breakthrough.
But the PM has been warned that unlike Donald Trump, Mr Biden is a supporter of the EU and has criticised Government Brexit legislation some claim risks undermining the Good Friday Agreement.
With perhaps as little as a week left to get an agreement in time for the end of the transition period on January 1, the two sides are deadlocked on fishing rights and state aid rules.
However, in a round of interviews this morning, Mr Eustice indicated there could be wriggle room on the Government’s fishing position.
He told Sky News: ‘On fisheries, we’ve always been open to doing a sensible approach looking particularly at agreements that might span a couple, three years for instance.
‘We’re going to be sensible in how we approach this but making sure that we have control of our own waters again and controlled access to our waters has always been a red line for us in these negotiations.’
He added: ‘The issue will become what are the sharing arrangements, how much mutual access do we allow in one another’s waters and that’s obviously a discussion that will happen annually, but there may also be a partnership agreement that sets out the ground rules as to how we will work on that.’
Lord Frost has previously insisted that negotiations must happen annually, although he has suggested a framework for quotas could be separate.
Speaking to reporters yesterday, Mr Johnson said the two sides were in sight of a deal.