Brexit is completed, but on the floor of the negotiation room there are loose ends, now discarded by both sides to fulfill the need for a Jan. 1 deadline for Boris Johnson. The trade agreement with the EU approved by Parliament last week was not the promised detailed, neatly bound package of tariff and quota arrangements.
In the coming months, No 10 and the Treasury will convene a team whose first task will be to investigate how one of those gaps can be patched by the financial services industry – the biggest barrier to trade with the EU arising from the absence of agreements covering the wider services market. Although the U.K. has There is a significant deficit in exporting goods to the EU, there is still a small surplus in services to cover the void – much of it because of the performance of London financiers. There may be little sympathy for bankers and insurers who complain that they are alone.
The chancellor said he hoped that a planned MoU on the issue would convince the EU and encourage Brussels to allow the City of London the access it desires.
The UK Chancellor of the Exchequer’s pledge that the UK “will remain in close dialogue with our European partners when it comes to things like equivalence decisions” should do the trick. EU negotiators are still angry about the betrayal of Johnson and wary of any handshake deal with his right handWe will all find out in the coming months if the name of Rishi Sunak commands appropriate respect for his right hand.
After all, for fear that this business will vanish to New York, Brussels has already agreed to amend the existing arrangements for clearing euro-denominated derivatives – a business controlled by London clearing houses. However, as the City lobby group TheCityUK has claimed, this deal replicates only one of nearly 50 contracts that will need to be negotiated within the MoU system. And as though that mountain were not big enough, EU negotiators are already furious at the betrayals and tactical back-and-forth of the prime minister over the past 18 months and suspicious of such a handshake deal with his right-hand man. The wariness is likely to apply to London’s proposal to grant access to the single market to other services.
It is true that lawyers have reached an agreement to have their credentials recognised in the EU, but without the British government making substantial concessions, it is doubtful that other providers can gain access to the single market. Maybe Johnson will find more compromises appropriate after moving his backbenchers in support of his offer through the aye lobby.
More likely, it would force service providers to look beyond Europe for lucrative contracts in Asia, the Middle East and the U.S. Banks and insurance companies could apply the same theory.
That won’t be the case, though. That would be too great a risk for Sunak, but if an agreement on financial services is feasible, then the opportunity to find better access for other sectors should be taken. The United Kingdom is too reliant on financial sector income and a change is long overdue. Brexit could provide an opportunity to remedy the balance. Not to deny the City benefit, at least not in the short term, but to increase access to other leading service industries in the world.
Unfortunately, it seems that chance has been squandered. As Boeing puts its Max woes behind it, a more extreme aviation crisis loomsAirline travelers don’t seem to have long memories: even after the most high-profile disasters, such as the hijackings of Sept. 11, 2001, they eagerly return to the skies. This is a positive sign for Boeing, which eventually returned its 737 Max aircraft to service after two deadly accidents that killed 346 people and resulted in a global flight ban. Last Tuesday, for the first time since March 2019, paying passengers in the U.S. took off on a 737 Max, ending a crisis era for Boeing. The crashes, however, and subsequent investigations, particularly by the U.S. Congress brought to light a culture of business in which