Prime Minister shoots down report that financial services Brexit deal is almost secured

The Prime Minister today denied reports that a Brexit deal to provide London’s financial services firms access to European markets is almost secured.

The City’s access to financial markets in the EU after the UK exits the bloc next year would be based on the EU’s so-called equivalence system, according to a report in The Times this morning.

A deal is ready to go if the Prime Minister and her EU counterparts can reach an overall Brexit agreement this month, an official also told Reuters today.

That saw sterling spike to 1.291 against the dollar, after it bounced back from a two-month low yesterday, while it climbed to 1.135 against the euro.

However, Theresa May's spokesperson dashed hopes of such a deal being close, saying: "When the BBC chooses to lead its bulletin on a speculative page 14 news story, it is time for everybody to take a deep breath."

An unnamed EU official and an anonymous UK government official also rubbished the report, according to Reuters.

Senior City sources told City A.M. that while they believe negotiations are making good progress, they are not getting over excited by reports that a deal is close.

Simon Morris, a financial services partner with law firm CMS, said reports of a deal had sounded too good to be true.

"The EU has constantly said that it will not agree to a global equivalence deal because that is something not even EU member states enjoy," he said.

Meanwhile, Hogan Lovells partner Rachel Kent said the report needed to be treated with caution, but that she hoped for principles on future financial services arrangements to be included in a withdrawal agreement next month.

“This would be very welcome in the City, which has been pushing for a deal on access for financial services firms since shortly after the vote in June 2016," she added.

“Such a deal would have clear benefits for EU firms who currently passport into London, including many of the large EU headquartered banks, as well as UK firms who provide financial services to EU corporates. Continued access to the widest choice of financial services is in the clear interests of consumers in Europe as well as being much more capital efficient, which also benefits them."

Kent claimed this should be fairly simple to implement straight after Brexit thanks to the alignment of UK and EU laws.

“While we will need a mechanism to determine how new laws are made and adopted going forward and there will be many other details to develop, it is very reassuring to see such an innovative approach from the negotiators," she said.

Monica Gogna, financial regulation partner at Dechert law firm, added that while she welcomed pragmatic steps to securing a deal, " the devil is, however, in the detail".

“Whilst it is useful to see that equivalence will be recognised, there are still not firm parameters on what this will now mean," she said. "Additionally, even with equivalence, asset managers will still need to adhere to jurisdiction-specific analysis to actually conduct business across Europe.”

The news comes after it emerged yesterday that Brexit secretary Dominic Raab believes a Brexit deal is likely to be signed in the next three weeks – by 21 November.

However, a Brexit department spokesperson said: “There is no set date for the negotiations to conclude.

“The 21 November [date] was the date offered by the chair of the select committee for the secretary of state to give evidence.”