Disruption in London could lead to more jobs coming to Ireland
A new study has revealed the level of international financial disruption that would be caused by the UK losing its 'financial passport.'
This grants UK financial service firms rights to sell into the European market and vice versa. It allows them to sell across the Union while being primarily regulated in their home market, lowering compliance costs. Britain has a large trade surplus in financial services.
The UK's Financial Conduct Authority revealed today that 5,476 UK-regulated financial firms use passporting rights to sell into the EU - while 8,008 companies use them to sell into Britain.
Andrew Tyrie, chairman of parliament’s Treasury Committee commented on the report, "None of the current off-the-shelf arrangements can preserve existing passporting arrangements while giving the UK the influence and control it needs over financial services regulation as it develops."
"Efforts to secure an appropriate arrangement for UK-based firms will be one of the most challenging aspects of the negotiations about the UK’s future relationship with the EU," he continued, before adding that the "business put at risk could be significant."
Jens Weidmann, president of the Bundesbank, has told The Guardian that a special deal to preserve these rights will not be given to the UK if it leaves the Single Market.
This could result in an exodus of financial firms from London and Britain's other financial hubs.
Meanwhile, a coalition of Eastern European countries are pledging to veto any exit deal which would see the UK remain in the Single Market while restricting the freedom of movement of people.