LONDON — Finance companies want the government to let Europe’s top court remain supreme in the City post-Brexit, in exchange for continued access to the EU’s Single Market.
The Times reports on Monday that finance executives are increasingly convinced that the government should use supremacy of the European Court of Justice (ECJ) over the finance industry as a bargaining chip to win market access.
Here is the key section of The Times’ report:
“Financial institutions are pushing David Davis, the Brexit secretary, to put ECJ oversight of the City on the negotiating table because they see it as key to getting the EU to agree a deal that would allow them to continue to operate within the single market.”
Financial firms are concerned about losing passporting rights, which currently allow companies to sell goods and services across the EU using a local licence and remote offices.
Post-Brexit, finance firms will likely have to set up regulated and full-staffed subsidiaries within the EU to serve customers in the 27-country bloc. This is costly and complex. As a result, companies are keen to find ways around this.
The idea of letting the ECJ retain final say over the City follows reports earlier this month that the EU is set to demand that the UK remains subject to EU laws and courts after Brexit if it wants a transition deal.
A transition deal would allow companies and the government to adjust to the new post-Brexit trading regime, rather than face a “cliff edge” that could see trade stopped altogether when Brexit officially occurs.