The European Union will climb down and agree a post-Brexit deal on financial services because the bloc “needs London”, PwC has predicted.
John Garvey, global head of financial services at the consulting firm, said that although any agreement is unlikely to happen in the short term, there will come a point when the EU realises a deal is in its own interests.
“There’s going to be a strange relationship developing over time where the Europeans realise they need London,” he said. “So, I think there will be some kind of deal because the continent will need access to the London market.”
His comments came after Mairead McGuinness, the bloc’s commissioner for financial services, said last week that the EU isn’t under any pressure to help City firms access its market and warned there won’t be any agreement while Britain plots different rules for the industry.
Ms McGuinness said the two sides could hold a meeting on market access issues by the middle of the year, but the process of finalising a memorandum of understanding on post-Brexit regulatory co-operation agreed last month was still ongoing.
“I know there probably is an appetite on the UK side for us to sit down and get going,” she said. “We are certainly very keen to do that, but we’re not under pressure to do it.”
Since the beginning of the year, the UK has been stripped of its passporting rights, which gave companies full access to EU markets, and financial services was largely excluded from the Brexit trade deal signed last December.
The memorandum agreed in March was welcomed by City officials, with hopes that talks between regulators will convince Brussels to grant market access to British firms, which is referred to as equivalence.