LONDON, Aug 23 (Reuters) - The UK’s financial sector is to propose to the government a “mutual access” trade pact between Britain and the European Union that would allow banks and other firms to continue doing cross-border business after Brexit, according to a draft report seen by Reuters.
Unless Britain negotiates new trading relations with the EU, banks, insurers and fund managers in Britain could be locked out of the bloc’s markets.
The International Regulatory Strategy Group (IRSG) says in a draft report to be submitted in September that a trade pact that would allow cross-border business to continue after Britain leaves the bloc in March 2019.
“The proposals in the report are intended to achieve a level of mutual access for EU and UK firms, which is as close as possible to the current levels of access that exist for such firms within the EU framework,” the report said.
The IRSG is sponsored by the City of London Corporation, home to London’s “Square Mile” financial district, and TheCityUK, Britain’s most powerful financial lobby.
The report sets out how a trade pact for financial services could be structured and policed by a new dispute resolution body with powers to sanction breaches.
Punishment could include withdrawal of mutual access rights, the payment of “compensation” in the form of offsetting trade benefits, or retaliatory steps, such as measures that affect an equivalent value of trade, the report said.
No such trade pact in financial services has been tried before.
“The IRSG is aware that there will be challenges associated with developing the EU/UK Agreement... and require the parties to reach agreement on a number of novel issues – in particular, with regard to allowing a firm from the other party to have access to their markets without having to obtain a local licence.” (Reporting by Huw Jones and Andrew MacAskill; Editing by Rachel Armstrong)