Tuesday 20 September 2016 6:27 pm

Passporting for financial hubs works both ways, watchdog numbers show

Thousands of UK financial firms are currently facing uncertainty over access to the Single Market, but figures out today have underscored that passporting is a two-way street.

Of the 13,484 firms using passporting which were accounted for in a letter from new Financial Conduct Authority chief executive Andrew Bailey to the Treasury Select Committee, 8,008 are using inbound passports, meaning they are using the rights to do business in the UK from another EU or EEA member state.

By comparison, 5,476 are using outbound passports, meaning the rights are being used by a UK-based firm to carry out business within the EEA.

"A lot of the way the debate's been structured has been about the UK firms losing access to the Single Market and the implications of that so the first thing that's thrown up when you look at the figures is actually there's quite a lot of firms that depend on the passporting for access to the UK market," Allie Renison, head of Europe & trade policy at the Institute of Directors, told City A.M.

Meanwhile, Simon Gleeson, a partner at magic circle law firm Clifford Chance, told City A.M.: "The City of London is a resource for the whole of Europe. It is not at all surprising that pretty much every major Continental European financial firm absolutely must have a presence in the City and therefore need to passport into the UK in order to operate."

City of London policy chairman Mark Boleat said the split of the figures demonstrated "how the UK acts as a gateway for firms from outside the EU that want to trade within the Single Market".

However, Andrew Gray, global financial services Brexit leader at Big Four accountancy firm PwC, told City A.M.: "In some ways, it doesn't matter whether the numbers are inbound or outbound. What it does show is that Continental Europe and the UK have developed an integrated financial system…If you split that apart, that is likely to result in higher economic costs to everybody which includes both the UK and the rest of the EU."

Commenting on the figures, Treasury committee chair Andrew Tyrie said: "Efforts to secure an appropriate arrangement for UK-based firms will be one of the most challenging aspects of the negotiations about the UK's future relationship with the EU.

"No doubt the hard grind of establishing what best protects UK interests is already underway. This issue needs to be right at the top of the in-trays of the chancellor, the governor of the Bank of England, and the UK's lead negotiators."