UK government wants ‘permanent equivalence’ for London’s financial center after Brexit

CNBC reports that the British government wants its financial center, known as the City of London, to have permanent access to the European market once the Brexit transition period is over, according to the Financial Times.

The U.K. stopped being a full member of the European Union on January 31, but it has yet to define its future trading arrangements with the other 27 EU countries. A negotiating paper, caught by a long-lens camera, showed Monday that the government is looking to get a "comprehensive, permanent equivalence decisions" for its financial industry, according to the report.

This would mean that the EU would grant market access in specified activities provided that the U.K. follows the same regulatory rules as Brussels. Financial services contributed to about 7% of the U.K.'s total output in 2018, according to a report from the U.K. Parliament. These firms are currently allowed to operate freely across EU nations, which allows U.S. firms based in the U.K. to sell financial products to EU-based companies, for example. However, the EU has signaled that if this is to continue it will depend on whether the U.K. chooses to follow European standards.

Speaking in December, the EU's financial services chief, Valdis Dombrovskis, said that Brussels is ready to cut off market access to the EU if the U.K. decides to deviate from European regulations. Prime Minister Boris Johnson, meanwhile, has said he wants the U.K. to diverge from key EU regulations.