In May I wrote that “the smart money would be on a ‘no deal’ Brexit at the end of the year.” In the current circumstances, I see no reason to revise my forecast.
Earlier this month, EU and UK negotiators met to resolve the impasse on state aid rules and fisheries policy. In recent days, issues to emerge include whether the UK will be able to return migrants to the EU Member State in which they first arrived (as things stand they will not) and whether UK truckers will be permitted to pick up and drop off loads in EU. It appears that the latter issue is being used as a bargaining chip by Michel Barnier because all the environmental and financial considerations suggest that an outright ban on this would not be sustainable nor sensible public policy. The two sides get round the table again on 7 September with the late October deadline to allow formal sign off for any agreement before the end of the year looming large.
Financial services has largely been left outside of discussions on the future relationship given that the EU has an equivalence mechanism (which includes prudential rules but not those in respect of consumer credit or mortgages) already in place. In a blow to those hoping that the Commission’s equivalence assessment of the UK market across 40 pieces of legislation, for example trading platforms, would be concluded imminently, European Commission Vice-President Valdis Dombrovskis who leads on financial services, said that UK institutions would have to wait till 2021 for the process to be completed. This is due to ongoing reviews in Brussels of rules contained within the equivalence framework. The uncertainty continues….
Published 27 Aug 2020