MercoPress. South Atlantic News Agency

City of London delegation heads to Brussels for a financial services deal: fears of losing passporting rights

The group will be led by former City minister Mark Hoban as banks fear the fallout from Brexit negotiations if access to EU markets is curtailed.

Business leaders from the City of London are to send a delegation to Brussels with a proposal for a post-Brexit free trade deal for financial services, it is reported. According to the Financial Times, the group will be led by former City minister Mark Hoban as banks fear the fallout from Brexit negotiations if access to EU markets is curtailed.

A number of banks have developed contingency plans after Prime Minister Theresa May confirmed that Britain would ditch the single market, including stepping up operations at other EU sites in cities such as Frankfurt, Dublin and Luxembourg. Any deal which sees the country lose access to the single market would mean City firms lose so-called passporting rights that provide wide-ranging EU access for UK-based financial services.

Meanwhile Brexit Secretary David Davis – who will host business leaders at a lavish grace-and-favor country manor this week – has played down suggestions that officials have quietly downgraded ambitions for a “cake and eat it” deal when Britain leaves the 28-member bloc.

The Guardian, which quoted “insiders”, said officials at the Department for Exiting the European Union (DExEU) are now presenting ministers with a choice between a deal similar to that enjoyed by countries in the European Economic Area (EEA) and single market, or a free trade agreement similar to the EU-Canada deal.

Mrs May’s strategy, set out in her Lancaster House speech in January, is to leave the single market and customs union to gain full control of immigration, but still strike a “comprehensive” free trade deal with cross-border commerce to be “as frictionless as possible”.

Participation in the EEA would risk a backlash from a number of voters who supported Brexit, as it would mean staying in the single market and therefore submitting to the free movement of EU citizens and European Court of Justice (ECJ) rulings. But the UK’s trade with the EU would be less free in a Canada-style deal.

However, the suggestions were rejected by a spokesman for Mr Davis, who denied there had been any change of mood since the election. The spokesman said the approach outlined in the Lancaster House speech remained the official strategy.

Asked to respond to reports of ministers now being forced to consider a trade-off, he said they “did not recognize the language”.

Mr Davis will host a conference Chevening House in Kent on Friday for business leaders, following reports that bosses felt excluded from the Brexit decision-making process. It comes after reports that corporate leaders wanted ministers to consult them more on Brexit and amid suggestions of a power struggle in the Cabinet over the shape of the UK’s exit from the European Union.

Mr Davis confirmed that new proposals will soon be set out to ensure the right mechanisms are in place to allow a regular and open dialogue between business and government.