France stuck to its tough stance in the Brexit negotiations on Tuesday, warning there was little chance of securing a free trade deal for financial services that would provide the degree of access sought by Britain’s biggest taxpaying industry, Reuters reports.
The French economy minister Bruno le Maire instead said finance companies may have to rely on what it known as equivalence. The legal mechanism allows countries from outside the EU to access the single market in limited circumstances but access is patchy and can be revoked at short notice.
Banks in Britain can currently trade across the bloc’s single market under European “passporting” rules, but this is expected to end after the United Kingdom ceases to be a European Union member in 2019.
“Financial services cannot be in a free trade agreement ... we have to rely on equivalence regimes, that is the best solution for financial services,” le Maire told BBC radio, citing the need for stability and supervision in the sector.
Britain’s government is proposing a mutual recognition system so financial service firms will retain access to the EU on the condition that each side preserve regulatory standards in line with the best international standards. But EU officials say that is not workable.
A stand-off between Britain and the EU over future access to the single market for London’s financial services industry is shaping up to be one of the key Brexit battlegrounds before Britain is due to leave the bloc in March 2019.
France potentially stands to gain from any move away from London as Europe’s financial services hub, and is trying to make itself more business-friendly after the election of former investment banker Emmanuel Macron.
“We want France to be as attractive as possible,” le Marie said.
He added that a post-Brexit trade deal between Britain and the EU should entail as little friction as a possible
“We need to find a new solution for the UK and the EU, and it will be up to Monsieur Barnier to find. The first objective should be as little friction as possible and the lowest possible tariffs,” he said.