Brexit: what is Theresa May’s deal on financial services?

The UK has agreed a tentative deal on post-Brexit financial services with Brussels that would cover all future trade in services and the exchange of data, according to reports.

In what Politico’s Jack Blanchard describes as “a pretty big moment” in negotiations, both sides have green-lighted plans to guarantee UK companies access to European markets as long as British financial regulation remains broadly aligned with that of Europe.

“Significantly, neither side would unilaterally deny market access without first going through independent arbitration and providing a notice period significantly longer than the current 30 days,” reports The Times.

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Global banks operating in the UK are reorganising their operations in the run-up to Brexit. Many have set up new European hubs and begun moving departments and staff, “to ensure they can continue to serve their continental clients if Britain leaves the bloc without a deal”, says The Guardian.

But according to The Times, the EU is to accept that the UK has “equivalent” regulations to Brussels and to allow UK financial services companies to continue operating as they now do in Europe.

A caveat remains, however, in that the agreement only represents a high-level declaration of intent, with the technical and legal details still to be worked out.

“When it comes to it, countries like France are going to do everything it can to make life hard for the City,” a senior UK business figure told the newspaper. “It is one thing to have warm words in a political declaration that is not binding, and [another] tying it down in a legal document.”

News of the potential trade deal has boosted hopes about the possibility of an overall Brexit agreement being reached between the two sides.

The Financial Times reports that at a private meeting with business leaders in London on Wednesday, Theresa May said that a deal looked set to be agreed “pretty soon”. One executive told the paper that the prime minister was “very optimistic” about the prospect.

That deal looks likely to take the form of a compromise offer, according to BuzzFeed News’ Alberto Nardelli, who says he has seen a leaked note from another private meeting of EU diplomats in Brussels.

“This would include a bare-bones customs union for the whole of the UK, covering duty and quota-free trade, with Britain committing to a common external tariff,” Nardelli reports.

“A customs union, however, would not remove the need for all regulatory checks and controls between the UK and the EU, meaning that a legally binding ‘backstop to the backstop’ for only Northern Ireland would still be required.”