Theresa May warned the EU that refusing to include financial services in a trade deal after Brexit would “hurt” its own economies, but admitted the UK would lose some trade access to its biggest market.
In her third big Brexit speech, the Prime Minister sought to use the might of the City of London to strike what she called a “unique and unprecedented” partnership with the EU.
Ms May admitted Britain would not get everything that it wanted – acknowledging “there are choices to be made, there are some hard facts to be faced”.
“We are leaving the single market. Life is going to be different. In certain ways, our access to each other’s markets will be less than it is now,” the London audience was told, in a clear message to hardline Brexiteers.
But she also warned Brussels that shutting financial services out of a deal – as the EU’s negotiator has threatened – would backfire by harming the Continent as well.
“This is a clear example of where only looking at precedent would hurt both the UK and EU economies,” Ms May said.
Next week, the EU is almost certain to offer the UK a “Canada-style” deal only, threatening an exodus of financial services firms from the City, with a dramatic loss of tax revenue.
But the Prime Minister pointed out that London was “the world’s most significant financial centre” supplying “more than £1.1 trillion of cross-border lending to the rest of the EU”.
“The Chancellor will be setting out next week how financial services can and should be part of a deep and comprehensive partnership,” she said.
She admitted City firms would lose their crucial “passporting” rights to trade across the EU because that was “intrinsic to the single market of which we would no longer be a member”.
In a speech which refused to give ground on the key battles over the Irish border and the customs union, Ms May did announce plans to pursue associate membership of key EU agencies – at a price.
What is Passporting?
Passporting is the exercise of the right for a firm registered in the European Economic Area (EEA) to do business in any other EEA state without needing further authorisation in each country.
After Brexit, where the U.K voted to leave the European Union in June of 2016, financial markets experienced a high level of uncertainty, as no one knew what would happen to the U.K. economy. Many speculated that a number of multinational companies – especially larger international banks – would leave the U.K and base elsewhere in order to retain their passporting rights and access to the single market.