The UK is set to argue the case for “mutual recognition” of financial services rules in Brexit negotiations with the EU, with Chancellor Philip Hammond tipped to endorse the proposals in a speech next week.
The Brexit plans, which are reportedly backed by the government and the Bank of England, would provide an alternative “equivalence” regime, which applies to third countries and only covers around a third of financial services, the Financial Times reports.
Equivalence would see the UK shadow EU laws and can be withdrawn at any stage with 30 days’ notice.
Mutual recognition would allow divergence as long as both sides adhered to a predetermined set of principles and outcomes, with the UK set to propose that dispute resolution mechanism for divergence from the spirit of the agreement.
EU chief negotiator Michel Barnier has repeatedly said the UK will not be able to carve out special access for specific sectors, including financial services, in its post-Brexit trade deal.