Parliament Street’s Director of Financial Services, Tim Focas was recently interviewed by FTSE Global Markets about recent statements made by former Treasury minister, Nicky Morgan.
Morgan had recently told a room full of European financial chiefs that “transitional arrangements would happen” in relation to Britain’s Brexit negotiations.
Tim’s interview can be read here or alternatively it is reprinted below:
Transitional agreements will happen, MP Nicky Morgan tells European financial chiefs
Wednesday, 03 May 2017
In all the bluster and grandstanding on both sides of the Channel, it is hard to believe that there will be a sensible and amicable Brexit. However, putting in her tuppence yesterday staunch Europhile and former education secretary Nicky Morgan has tried to reassure the European financial sector that there will be transitional agreements to avoid the UK economy from falling off a so called “cliff edge”.
Speaking exclusively to over 1,000 of Europe’s most senior finance professionals at TradeTech in Paris last week, Morgan deviated from the government’s hard Brexit line, but was unable to confirm how long the transitional period would be. She did, however, state that the timeframe would have to be managed to in order to “meet political expectations.” A frequent critic of the government’s Brexit position since being ruthlessly sacked from her cabinet position last year, Morgan also called on UK financial execs to stand up for their industry in the negotiations.
“For those based in London, I hope you are in regular discussions with both the treasury, and the department for Brexit to try and secure a bespoke agreement to ensure unfettered access to the Single Market” she said. The one-time treasury minister also spoke out on the complex issue of passporting, which enables UK financial firms to carry out business across borders. The former City lawyer claimed that country equivalent passporting rules simply wouldn’t give the same level of access.
She went onto say: “A bank may be able to rely on provisions under MiFID II to carry out certain investment activity, but it could not carry out other services because the relevant legislation underpinning the Capital Requirements Directive does not include equivalence provisions. The third country provisions are unreliable because financial regulation is liable to change, and as EU legislation evolves the UK would have to adapt its own legislation to remain equivalent. This leaves the UK rules vulnerable to political influence because the European Commission has a role in deciding whether a country is equivalent or not.”
Reacting to Morgan’s keynote speech, Tim Focas, director of Financial Services for Westminster think tank Parliament Street notes, “While Morgan’s comments make short to medium term economic sense, transitional agreements represent a political ticking time bomb. Who knows how long they will be for, and in which time the UK would still remain under the full jurisdiction of the European court of justice and free movement would continue for a while longer.”
In a speech largely dominated by remain rhetoric, Morgan did admit that the economic impact of Brexit forecasts produced by the Treasury have “not come to fruition.” However, in a note of support for the PM, Morgan swerved back on to the party message in an election pitch to delegates. “Out on the doorsteps, I have to say things are looking positive for the Conservative Party and Theresa May is deemed to be a strong asset. And this election, perhaps more than others, is about leadership as the UK exits the EU.” Morgan concluded in a partisan ending.
Actually, the UK election is more than about Brexit and the Conservative government is playing a dangerous game playing up EU opposition to a happy Brexit divorce and May’s supposed strength as a political leader. Real debate won’t pick up unless the Conservatives actually release some kind of manifesto which the public will look to for solutions to crisis level problems in the UK’s national health service, social services, municipal funding, policing, and the evolution of a new industrial and defence strategies. For the time being Brexit is the big distraction, with the UK public at a huge disadvantage right now.
