David Davis is on a determined mission to show global bankers some love, promising he’ll work to protect the City of London from any trouble caused by Brexit.
The minister for exiting the European Union has made two speeches in the space of a week setting out his plan to ensure the U.K. capital keeps its status as a world-leading financial center. It’s a far cry from the prime minister’s attack last year on the international elites as the “citizens of nowhere” who had driven disillusioned voters to pull Britain out of the EU.
In his latest comments, at a UBS conference in London on Tuesday, Davis said he wanted bankers to retain their ability to transfer between offices in the U.K. and the EU after Britain leaves the bloc in 2019. And he predicted he’d win agreement on a transition period “very early next year.”
UBS Group AG is among the companies that have recently set out their plans to move London-based workers to other European cities after Brexit.
U.K. Prime Minister Theresa May has proposed a two-year transition phase intended to keep businesses from triggering their contingency plans while Brexit talks continue, but the EU is reluctant to agree to the idea until Britain has signed up to the terms of the divorce.
“An implementation period is not the only area where we’ve listened and taken the concerns of businesses on board,” Davis said. “Ensuring that the financial services sector can attract the talent it needs to thrive is also vital as we leave the EU.”
A new immigration law next year will set out the U.K.’s plan for a revised rulebook, he said. While Britain wants to control the numbers coming in, this won’t mean “pulling up the drawbridge,” especially for highly skilled workers like bankers, he said.
“We want to ensure that our new partnership with the EU protects the mobility of workers and professionals across the continent,” according to Davis. “Whether this means a bank temporarily moving a worker to an office in Germany or a lawyer visiting a client in Paris, we believe it is in the interests of both sides to see this continue.”
A new regulatory regime for financial services after Brexit must be “reciprocal” and “durable,” he said. It is a clear signal that a set-up based only on regulatory equivalence — which can be withdrawn at a month’s notice — won’t be good enough for the U.K. Businesses need to “know what their regulatory obligations are going to be, not only next week, but next year, and beyond.”
Some U.K. officials believe rival cities such as Frankfurt or Paris are lobbying their governments to stall on Brexit negotiations in the hope of tempting businesses away from London. Davis said the EU won’t recreate another leading financial center in Europe if the City of London suffers.
“Fragmenting clearing houses, or banking or insurance centers, would mean higher costs for European businesses, big and small,” Davis said. “Protecting the City — and the contribution it makes to communities and economies right across Europe — is a responsibility not just for the U.K., but for Europe as a whole.”