02:16 GMT26 November 2020
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    The news comes as a significant blow to British Prime Minister Theresa May's plans to secure a "bespoke" trade deal with the European Union that will shield British financial services.

    Speaking to the Guardian, European Chief Negotiator for Brexit Michel Barnier stated that the EU would not accept a special deal for  British banks and financial companies as part of the new trade agreement.

    Barnier highlighted that following the UK's withdrawal from the EU, the country's financial services will no longer be authorized to freely operate within the Union, effectively crippling the entire British financial sector which accounts for as much as 80 percent of the country's economy.

    "There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn't exist," he declared.

    The EU negotiator also claimed that the UK has itself to blame for this situation, given "the red lines that the British have chosen themselves," as leaving the single market necessarily entails the loss of the "financial services passport" that is required for operation in the Union.

    In a move that will infuriate die-hard Eurosceptics, Barnier also stated that during the post-Brexit transitional period the UK must continue to submit to the EU's "complete architecture," including new European laws that would be made without the participation of British MEPs, food regulatory policies and the jurisdiction of the European Court of Justice (ECJ).

    READ MORE: Models for Post-Brexit UK-EU Trade Agreement and Their Pitfalls

    "It will be essentially the economic status quo," he said.

    "We will not accept from the other side, regulatory competition against social rights, against environmental rights, against consumer rights and against fiscal regulations… Or against financial stability."

    Barnier's comments throw a wrench into Theresa May's work to ensure that her "bespoke and ambitious" trade deal is accepted by the 27 EU member states.

    After the meeting of the Brexit "war cabinet" this Monday, government sources quoted by the Guardian stated that the UK leadership will not allow provisions on financial services to be isolated from the broader trade agreement, preventing the EU from "cherry-picking some sectors."

    Earlier, Brexit Secretary David Davies insisted that the UK-EU trade deal should be "far more ambitious" than the free trade agreement reached between the Union and Canada in 2016 by including British financial services.

    READ MORE: Not an 'Economic Models' Fan, UK Minister Admits to No Analysis of Brexit Impact

    Barnier, however, denied the possibility of the so-called "Canada plus plus plus" model, claiming that the terms set forth by the UK on the jurisdiction of the ECJ, the migration policy and food standards limit the scope of the trade deal.

    The EU and the British Government are expected to move towards trade negotiations following the European leadership's declaration that "sufficient progress" was made in talks on three fundamental issues, the Irish border, the Brexit divorce bill and the citizens' rights.



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