Financial Services will be excluded from any trade deal between the UK and the EU after Brexit, according to an updated version of the EU draft negotiating guidelines. The document also calls for EU citizens living in the UK to be granted permanent residency once they have lived there for five consecutive years.
The new draft of the negotiating guidelines marks a stiffening of the EU’s position ahead of Saturday’s Brexit summit, where EU leaders are expected to adopt the document as the bloc’s official negotiating position for Brexit talks in June. The updated guidelines will come as a blow to UK Prime Minister Theresa May who had hoped to sign a comprehensive trade deal including financial services with the EU 27 after Britain leaves the bloc in 2019. A trade deal that doesn’t cover financial services means that firms operating in the UK will lose the right to automatically market their services in the EU, unless they first promise to comply with Brussels’ regulations, which are often stricter than those in London.
The tougher stance is a reflection of the desire in places like France and Germany to challenge the supremacy of London as a global financial hub by positioning themselves as alternative locations that can offer full EU access.
The draft also makes a more explicit statement about guaranteeing the rights of EU citizens living in the UK. While the original draft states that “agreeing reciprocal guarantees to safeguard the status and rights (of EU citizens living in the UK and vice versa)…will be the first priority for the negotiations” the new draft has added a line stating that they should have ‘the right to acquire permanent residence after a continuous period of five years.’
Theresa May’s refusal to unilaterally guarantee such rights for EU citizens currently living in the UK has been criticised by the opposition Labour party who have made it one of their election campaign promises. May called for a snap election to take place in June partly on the grounds that a larger parliamentary majority for the Conservative government will strengthen its hand in the upcoming Brexit negotiations.
“Every vote for the Conservatives will make me stronger when I negotiate for Britain with the prime ministers, presidents and chancellors of the European Union,” May said in her statement announcing the elections.