Access to the European Union market for Britain-based financial firms will be linked to the overall results of trade talks with London, EU chief negotiator Michel Barnier said on Monday.

Britain and the EU will lose privileged access to their respective financial markets when the Brexit transitional period expires at the end of December.

But in some sectors financial firms could remain able to operate across borders if rules are deemed to be equivalent.

But even when equivalence does exist, the EU will remain free to grant access or not to specific sectors.

“The EU will consider whether our economic partnership will be accompanied by equivalences,” Barnier told a news conference in Brussels.

Equivalences “are relevant for the overall future relationship and need to be considered in that light,” Barnier said, noting that those decisions were not part of his draft negotiating mandate for a trade deal with London, which he unveiled on Monday.

“It’s all outlined in the political declaration already and everything is negotiated when everything is negotiated. So fish and financial services and energy, you name it, all has to be done before we sign,” European Commission President Ursula von der Leyen told reporters.

Barnier said the assessment of sectors that might be considered equivalent will begin “immediately” and underlined equivalence decisions will be made “unilaterally.”

British Prime Minister Boris Johnson called for purely “technical” assessments on equivalence regimes and urged a mechanism to discuss equivalence decisions with the EU.

“Given the depth of the relationship in this area, there should also be enhanced provision for regulatory and supervisory cooperation arrangements with the EU, and for the structured withdrawal of equivalence findings,” Johnson said in a written statement on Monday.

Barnier also urged cooperation with Britain on financial services but stressed that would need to preserve the EU’s “autonomy.”

The EU permits the use of equivalence regimes for some 40 financial sectors, but only foreign investment banks, clearing houses and stock exchanges can have full access to the EU market, while other firms face different levels of limitations, EU officials said.

Retail banking is not covered by equivalence.

Faced with a huge, rival financial center on its doorstep, the EU began toughening up equivalence conditions ahead of Brexit specifically for foreign clearing houses and foreign investment banks that want to offer investment services to EU customers.

Britain will also have to assess whether to grant access to EU financial firms to UK customers under the same equivalence system it has introduced into British law.

Spooked by the uncertainty of the trade talks and of the equivalence regimes, many banks, asset managers, insurers and trading platforms based in Britain have already opened EU hubs.

Under equivalence rules, which the EU already apply to the United States and other international partners, the EU and Britain will be free to adopt different prudential provisions to protect financial stability in their markets.

Topics Europe