Senior London bankers will urge the government to negotiate a special Swiss-style trade deal with the European Union to keep access to hundreds of millions of European customers, according to a report in the Financial Times.
The British Bankers’ Association and other lobby groups, have drawn up a plan to give banks in the UK access to the European Union single market, and let EU banks gain access to the UK market, the FT said, adding that the plan will be presented to Prime Minister Theresa May in September.
Swiss insurers are allowed free access to the EU market, and vice-versa, in return for making sure its regulations are the same. Swiss banks do not have the same deal however, and are also subject to slightly different financial rules.
The current EU set-up allow banks in the UK to use a “passport” to access the EU single market of 28 nations.
The June vote for a British exit from the European Union, or Brexit, threatened that deal because the arrangement depends on the free movement of people and contributing to the EU budget, both of which are considered politically difficult to maintain after leaving the EU. Campaigners for the Leave vote said Brexit would lead to tighter immigration controls and savings from no longer having to pay into the EU budget.
The financial services passport is essential for international banks based in London. Investment banks that shift operations abroad quickly in the event of the UK losing its access to the EU single market will benefit from a “first-mover advantage,” according to a confidential Deutsche Bank briefing seen by Business Insider last month.
The internal note said the bank’s competitors would most likely ramp up operations in Ireland, France, Germany, and Luxembourg, where they have existing subsidiaries.
JPMorgan CEO Jamie Dimon warned in July that the bank could be forced to move thousands of workers out of Britain. Richard Gnodde, cohead of Goldman Sachs International, would not rule out moving some or all of the bank’s 6,500 UK staff members to Europe when asked about Goldman’s post-Brexit plans.
There are signs that some EU members could be receptive to a special deal with the City. Michael Roth, Germany’s European Affairs minister, said that the UK could gain “special status” with the EU earlier this week.
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