Why is the City unhappy with the “Brexit deal”?
Why does this matter?
What is equivalence?
Is that the solution then?
What’s the alternative?
There are two in play;
- Since firms will lose their passporting rights when we leave the EU, they could establish fully fledged subsidiary operations within every separate EU member state to guarantee access to its markets and customers. Some have started to do precisely that already, but it takes time and is time-consuming and expensive (in terms of relocation costs and regulatory capital requirements)
- “Mutual recognition” whereby two regimes accept equivalence simultaneously. The EU don’t want to give us this “cake and eat it” solution – they want post-Brexit control over the process. And some of the issues raised earlier could still get in the way…