LONDON, March 7 (Reuters) - Keeping British and European Union rules in lock-step after Brexit is an ambitious but achievable to maintain access to each other’s financial markets, the City of London’s Lord Mayor said on Wednesday.
Though it remains unclear how much access UK banks, insurers and asset managers will have to EU investors after Britain leaves the EU in March 2019, the ceremonial head of London’s financial district called for a deal that includes mutual recognition of each other’s financial rules.
Under mutual recognition, both sides would agree to keep their rules similar, ensure close cooperation between regulator, and have an independent mechanism for resolving disputes.
British Prime Minister Theresa May backed such an approach for financial services last week.
“It would represent a true win-win for Europe,” Lord Mayor Charles Bowman said in a speech in Madrid as part of a long list of visits by City of London luminaries to European capitals this year.
“Maintaining a default position of regulatory alignment, to underpin mutual market access, will give us so much.”
Bowman’s comments underscore how mutual access remains the City’s Plan A for a trade deal despite officials in Brussels saying in January that such a deal would be unacceptable because it would keep the benefits of the single market but without the obligations.
Financial lawyers say EU officials won’t compromise until the last minute to avoid taking pressure off banks in Britain to apply for licences in the EU.
French finance minister Bruno Le Maire said on Tuesday that financial services cannot be part of a future trade deal with the EU and that the bloc’s system of regulatory “equivalence” is the best solution.
Several thousand financial services jobs will probably be relocated from London to Paris because of Brexit, Le Maire said.
Equivalence is an EU legal mechanism that allows countries from outside the bloc to access the single market in a limited way but with the EU able to revoke access at short notice.
Bowman does not foresee plans to ease British financial rules despite calls from financial firms for UK regulators to give formal consideration to London’s competitiveness.
“In all my meetings with officials, politicians, policy experts, I have seen no appetite to slash regulation after Brexit,” Bowman said.
Many banks, insurers and asset managers in Britain are not waiting to see what sort of trading deal emerges, preferring instead to go ahead with plans to open up new hubs in the EU.
Reporting by Huw Jones Editing by David Goodman