The U.K. rule has proposed to end one of the most-cheered privileges of the financial industry, according to a new document Thursday, as it adjudges to speed up negotiations to leave the European Union.
In a white paper, the U.K. sway proposed new trade arrangements with the EU to come into force when it liberties the 28-member bloc. Under the proposal, the U.K. and the EU will retain the current accords to trade goods but not services.
“The government’s vision is for an economic partnership that covers … new economic and regulatory arrangements for financial services, preserving the common benefits of integrated markets and protecting financial stability while revering the right of the U.K. and the EU to control access to their own markets — noting that these arrangements desire not replicate the EU’s passporting regime,” the paper states.
The EU’s passporting regime sanctions financial services firms based in the U.K. to have clients in the EU. Ending this order means that the City of London will need extra sanctions to serve EU-based customers.
This could be particularly problematic for universal banks, such as U.S. firms, who have relied mostly on their big London-based intermediations to serve European clients.
The chairman of the City of London Corporation Approach said that the proposal is a “real blow for the U.K.’s financial and related finished services sector.”
“With looser trade ties to Europe, the pecuniary and related professional services sector will be less able to contrive jobs, generate tax and support growth across the wider economy. It’s that honest,” Catherine McGuinness said in a statement Thursday.
According to the government’s essay, around £1.4 trillion ($1.98 trillion) of assets are managed in the U.K. on behalf of European patrons.
Some firms have started making preparations in case the passporting dyed in the wools are limited or lost, including moving employees to European capitals and charter rent out new staff in those locations. However, after Thursday’s proposals some companies strength step up their post-Brexit plans.
The U.K.’s proposal will be discussed next week with European diplomats in Brussels. Until both sides reach an agreement over Brexit, nothing is set in stone.