The City of London has not abandoned hope of maintaining full access to the European Union’s single market after Brexit, according to an industry lobby group.
“The banking sector unequivocally wants to maintain the current level of full access to the EU market, to ensure that businesses and customers across Europe can still be served by U.K.-based banks,” British Bankers’ Association Chief Executive Officer Anthony Browne said in a statement. Browne was responding to a Financial Times report earlier Friday that said banks had “given up hope” of maintaining universal access.
Central to lenders’ concern is the issue of passporting. Under EU law, a bank incorporated in any member state can sell its products and services in all 27 others, thus accessing a $19 trillion integrated economy with more than 500 million citizens. It’s a regime that allows even the largest banks to get by with only satellite offices in capital cities like Paris and Madrid, and none at all in many other EU countries, keeping the overwhelming bulk of staff in London.
“Retaining full market ‘access’ to the single market is different from retaining full ‘membership’ of the single market,” Browne said in the e-mailed statement. “The latter involves being a member of the European Economic Area, which under current rules brings a number of obligations such as freedom of movement and having to adopt financial services regulations which the U.K. has little influence over.”
While U.K. Prime Minister Theresa May has said she will fight for the City to retain its passporting rights, bankers and lawyers say she faces an uphill battle trying to win concessions from EU partners still smarting from the outcome of the June 23 vote.
Bank executives are privately discouraged that seven weeks after the referendum, the ministers in charge of negotiating the best deal for the U.K. believe they can retain the benefits of being in the single market without accepting the free movement of EU citizens, Bloomberg News reported earlier this week.