Brexit: UK 'must focus trade on CPTPP regions' says Habib
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In a joint letter, pro-Brussels groups from the European Parliament called for a “very close look at the tax and anti-money laundering” in the UK. They argued that British bankers and fund managers should be locked out of the EU’s financial services market until their demands are met. EU and UK officials are currently hammering details for a potential cooperation pact for financial services to run alongside the trade and security treaty signed late last year.
Their wrangling is expected to come to an end next month with a formal regulatory framework for bankers on both sides of the Channel to follow.
In its letter, the EU Parliament’s economic and monetary affairs committee called for the pact to be “underpinned by robust commitments aimed at preventing tax evasion, aggressive tax avoidance and money laundering”.
Brussels has long feared that an independent Britain would become a low-regulation hub – often branded “Singapore-on-Thames”.
The MEPs said the EU must “integrate robust commitments” to prevent the UK from becoming a low-tax destination for businesses “to ensure a level playing field”.
They also want “continuous monitoring of any possible digression of UK rules from EU standards with a view to avoiding undue competitive advantages”.
Their intervention comes after Michel Barnier warned that British financial services firms are trying to sneak into the EU market through the backdoor.
The Brexit negotiator suggested some companies were attempting to circumvent post-Brexit rules by setting up shell companies inside the bloc.
“As far as financial services are concerned, we know there are attempts to circumvent the new rules through what we call letterbox structures,” Mr Barnier told a business summit in Brussels.
“Needless to say national authorities of the EU in each and every country and the EU authorities themselves will be very, very vigilant.
“In the next few weeks and months, I recommend everyone to be careful.”
British firms lost their so-called “EU passport” to the single market on January 1 when the transition period expired.
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Financiers must rely on equivalence agreements, under which the EU deems UK rules robust enough, for market access across the bloc.
Bank of England chief Andrew Bailey claimed Brussels’ approach to equivalence was aimed at forcing the City of London to be a “rule-taker”.
Mr Barnier cast doubt on an immediate equivalence decision to allow British firms access to 28 financial sectors across the EU.
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The Frenchman said Brussels would holdout until the Government hands over detailed plans on how it plans to diverge from EU rules.
Mr Barnier said: “In this process, the main concern of the commission is to defend the union interest once again, and financial sovereignty, the integrity of our financial markets and financial stability.”
He added: “Brexit means Brexit. We will have to face many consequences.”
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