UK and EU deny reports of financial services deal
November 1, 2018
The pound sterling had risen against both the US dollar and the euro on Thursday after reports of a deal with Brussels on financial services after Brexit.
But Downing Street dismissed the report later in the morning: "This is speculation. While we continue to make good progress, agreeing new arrangements for financial services negotiations are ongoing."
The Times newspaper had reported that UK financial companies would have access to European markets so long as UK financial regulations were broadly in line with those in Europe. Quoting unnamed UK government sources, the newspaper said the deal covered both financial services and the exchange of data.
Under the reported terms of the plan, market access could not be denied unilaterally without independent arbitration and after consultation over a longer period than the current 30-day period. It was not clear from the report who would be the independent arbiter.
EU negotiator Michel Barnier went on Twitter to call the report "misleading" and commented: "EU may grant and withdraw equivalence in some financial services autonomously."
Brexit secretary Dominic Raab backtracked after hinting earlier this week that a wider Brexit deal was just weeks away. His Department for Exiting the European Union said, "There is no set date for the negotiations to conclude."
The issue of the Irish border continues, however, to be a major stumbling block to the wider Brexit agreement.
Relocations out of London have already been started by some key businesses. US global concern Goldman Sachs has started to move investment bankers and financing experts to Milan, Frankfurt and Paris. Bank of America is to make Dublin its post-Brexit headquarters for Europe and is opening a trading floor in Paris for 1,000 staff. The Bank of England thinks about 5,000 financial services jobs could be lost from the City of London.
France and Italy offer expat benefits
Research for the Financial Times found that France and Italy are offering the most generous tax breaks for London bankers making the move. Germany is reported as the least beneficial in terms of net take-home pay for expat bankers as it does not offer additional expatriate or travel deductions.
According to the FT, UK expats in France making a million euros could take home €180,000 ($204,000) more than they would in London. In Italy, it could be an extra €200,000. Germany does not offer an expat tax regime. The German constitution states that German nationals and foreigners must be treated equally for tax purposes.
UK crackdown on economic crime
On Thursday, the UK government also announced the formation of a new, multi-agency national economic crime center.
The country's estate agents, solicitors, accountants, private schools, football clubs and luxury car garages are accused of failing to report suspicious activity by clients, some of whom arrive with suitcases filled with cash bills. Under the new strategy, should they fail to report the activity they will face sanctions and even jail.
Money laundering in the UK is estimated at 100 billion pounds (€113 billion, $128 billion).
The government's security minister, Ben Wallace, said the new agency would prioritize the most serious offenders in a more intelligence-led approach. Banks, which account for most of the suspicious activity reports, are already taking measures, Wallace said. It was others in related sectors who needed to do more.
The UK was named in the Panama Papers investigations in 2016 for not doing enough to tackle money laundering.
Wallace told the Guardian newspaper: "Post-Brexit if we're going to make Britain and the City of London successful then it has to have a reputation for cleanliness and security."
jm/sms (Reuters, AFP)