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May balks at Brexit demands for financial services

March 4, 2018

The prime minister maintains that Britain is worse off when it abides by decisions made in Brussels. But an industry services lobbying group says finance companies are already fleeing Britain.

Prime Minister May delivers a Brexit speech behind a dais with the inscription, 'Our Future Parnership'
Image: Getty Images/L. Neal

Prime Minister Theresa May poured cold water on Britain's financial sector and their push for "passporting" rights that would more-or-less allow Britain to remain the financial center of the European Union.

She defended her position by saying Britain could not become a "rule taker" when it came to financial services.

"What we are looking at," she said, "is a new relationship on financial services based on this concept of mutual recognition."

Her comments were broadcast Sunday on the BBC during an interview that was recorded on Friday.

She maintained that her view of future British-EU ties was credible and expressed confidence that she would reach a good deal, although she appealed for the bloc to be more flexible in its negotiations.

Explaining her thinking in more detail, May said the financial services sector was too important to the British economy to have the EU maintain control over it through the existing "passporting" agreement.

The passporting rules allow finance companies in the EU to sell their services across the 28-member bloc with a local license, negating the need for a license to operate in each member country where it does business.

"If we were to accept 'passporting' we'd just be a rule taker, we'd have to abide by the rules that were being set elsewhere," May said in the interview with the BBC.

"Given the importance of financial stability, of ensuring the City of London, we can't just take the same rules without any say in them," May said.

Brexit treaty would 'threaten' UK's integrity

Accused of cherry picking

The Confederation of British Industry, a lobbying group, has pressed for maintaining the passporting agreement and said it feared an exodus of financial services companies from England.

"Now we do have an opening negotiating position. It needs to be followed through, it needs to be followed through very quickly because financial services firms are moving now," CBI Director General Carolyn Fairbairn told BBC radio.

May is pushing for a free trade deal with the EU and wants financial services included in that, and she believes it is still possible even though Brussels has accused her of "cherry picking" the best parts of the EU

"I've said before that no deal is better than a bad deal, but I'm confident that we can get a good deal, and get the right deal for the British people," May said during her broadcast interview.

"If we look at our future prosperity and security, in the UK and in the other 27 countries, actually the right deal for us will be the right deal for them too."

The Irish question

Ireland is another thorny issue confronting the British prime minister. Ireland's foreign minister Simon Coveney said on Sunday that May has yet to spell out her plans for the Irish border, which would become the only land border between Britain and the EU after Brexit.

"She hasn't really gone into any more detail than we've already heard in terms of how she is going to solve the problem of maintaining a largely invisible border on the island of Ireland," Coveney told the BBC.

Meanwhile, Scotland's first minister Nicola Sturgeon said she still hoped to build support for staying in the EU's single market and customs union — which May has ruled out.

Read more: Brexit 'will leave UK worse off'

bik/rc (AP, Reuters)

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