World Economy

UK Banks Seek Special Deal

Banks say, if they don’t feel secure, they may soon start moving staff and operations from London.Banks say, if they don’t feel secure, they may soon start moving staff and operations from London.

British banks want Theresa May to strike a Brexit deal just for them. The prime minister is being lobbied by finance companies to win them an interim agreement with the European Union before formal exit talks start, two people familiar with the matter told Bloomberg.

A transitional pact would seek to preserve passporting, which ensures the ability of banks to freely sell services and products across the EU, beyond the end of two years of official negotiations, said the people, who asked not to be identified because the matter is private.

The pitch may prove unrealistic because European leaders, including German Chancellor Angela Merkel, have repeatedly said they won’t engage in informal talks before May activates Article 50, which sets the timeframe for withdrawal. The threat of banks is, if they don’t feel secure in the UK they may soon start moving staff and operations from London.

Chief Brexit negotiator David Davis is upbeat he can secure less immigration and continued access to the EU’s single market.

Speaking in Northern Ireland Thursday, Davis said it’s in Europe’s interest to have a “good trading relationship” with Britain and that even as there are more controls on the number of people entering the UK, “what we will seek to do ideally is have a tariff-free access”. European leaders have warned the UK it must accept freedom of labor movement if it wants to maintain its current trading relationship.

European Commission Vice President Jyrki Katainen said in an interview in Bucharest that he sees the UK opening negotiations “sometime early next year” although “the sooner the better” given companies don’t like uncertainty.  Not so sure about that is Stephen Harmston, head of reports at pollster YouGov. He said once Article 50 is triggered, “things could change for the worse quickly” for companies. For now, executives are brushing aside their doubts, he said, with the YouGov/Cebr Businsss Confidence Index rising to 109.7 in August from 105 after the referendum.

Meantime, senior Conservative lawmaker Andrew Tryie says in a report for think tank Open Europe today that May’s government should release an “early, full and detailed explanation” of its negotiating position.

Meanwhile, the campaign to keep Britain inside the European Union relaunches itself on Friday as a pressure group pushing for a departure that changes as little as possible. Top of the wish-list for the group, now calling itself Open Britain, is continued membership of the EU’s single market, with “influence over regulatory decision-making”.