The U.K. government has proposed to end one of the most-cheered privileges of the financial industry, according to a new document Thursday, as it tries to speed up negotiations to leave the European Union.
In a white paper, the U.K. government proposed new trade arrangements with the EU to come into force when it leaves the 28-member bloc. Under the proposal, the U.K. and the EU will retain the current agreements to trade goods but not services.
“The government’s vision is for an economic partnership that includes … new economic and regulatory arrangements for financial services, preserving the mutual benefits of integrated markets and protecting financial stability while respecting the right of the U.K. and the EU to control access to their own markets — noting that these arrangements will not replicate the EU’s passporting regime,” the paper states.
The EU’s passporting regime allows financial services firms based in the U.K. to have clients in the EU. Ending this regime means that the City of London will need extra licenses to serve EU-based customers.
This could be particularly problematic for international banks, such as U.S. firms, who have relied mostly on their big London-based offices to serve European clients.