Importance of EU passporting to financial services ‘overstated’

In its new study, Open Europe said the significance of rules, which allow UK banks, insurers and asset managers to easily access EU markets, has been exaggerated and even has little value to some sectors of the industry.

The European affairs think tank said the Government must instead tailor its negotiations to those needs of specific finance sectors most affected.

Vincenzo Scarpetta, Open Europe’s senior policy analyst, added: “The significance of the financial services passport depends on the industry. It is important to business in some sectors, but has much less value in others.

“To claim that the success of the UK as a global financial centre is entirely reliant on the passport is exaggerated.

“In the upcoming negotiations with the EU, the Government needs to focus its efforts on retaining or replicating a passport-like relationship in those sectors where it is most valuable.”

The report’s authors identify banks as the area of the industry most at risk from uncertainty compared to other elements such as insurance and called for a warning period of one year for lenders once new rules are established in principle.

Mr Scarpetta, said: “It is essential for the Government to avoid a cliff-edge situation.”

He added: “The financial services industry needs maximum certainty on future trade arrangements with the EU as early on as possible in the negotiations. Firms have been planning for the worst, and some of them may start putting those plans into motion if uncertainty drags on for too long. The UK will need to convince the EU-27 that keeping financial markets open across the Channel is a matter of mutual interest.”

Read the full Open Europe report here.