Brexit: EU’s ‘penny is dropping’ on UK sovereignty, says Gove – BBC

  • The cabinet office minister told the BBC that British negotiators needed to see “movement on the EU side”. The two sides resumed talks in London this week, with a UK government source saying they were in the “final stage”.
  • “One of the arguments we have always made is that by choosing to leave the European Union we became a sovereign equal – and it’s absolutely important that the EU recognise that”, Mr Gove told the BBC’s Political Editor Laura Kuenssberg. “I think the penny is dropping but negotiations are going on at the moment in order to make sure that those final areas of disagreement are finally resolved.”
  • Leaving the business department in central London, where the negotiations are being held, at lunchtime on Thursday, EU chief negotiator Michel Barnier said talks were an “ongoing process”. “Patience,” he added.
  • Asked by Laura Kuenssberg, if the government thought the UK would be ready whatever happens, Mr Gove said that the UK’s negotiating team is “on course to be ready to take advantages of all the opportunities of being outside the EU”. He added that the negotiating teams are “continuing to battle hard for the whole of the UK”. Prime Minister Boris Johnson has said he is prepared to move forward without a deal.
  • Speaking to the BBC on Wednesday, Irish Taoiseach Micheál Martin said the UK has to “knuckle down” to get a trade deal with the EU by the end of the year, when the Brexit transition period ends. He also said failing to reach an agreement would be “very, very damaging all round”.

City regulator warns on three Brexit ‘cliff-edge’ risks – FT

  • The UK financial regulator’s head of Brexit preparations has warned that banks and investment firms still face three “cliff-edge” risks when the transition period for leaving the EU expires in seven weeks. Speaking at Thursday’s City & Financial summit on post-transition regulation, Nausicaa Delfas — the Financial Conduct Authority’s executive director of international — said issues with derivatives trading, the transfer of personal data and offering services to customers in the EU remained a real possibility after January 1. “We should not assume, even if a deal is agreed, that it will mitigate outstanding risks in financial services,” she said.
  • The first two of those threats could yet be addressed by a last-minute deal with the EU, she said Earlier this week, chancellor Rishi Sunak announced that the government would recognise many areas of EU financial regulation as sufficiently tough as the UK’s own standards from January, a process known as equivalence. That will enable UK-based banks and fund managers to continue accessing EU exchanges, benchmarks and services. He said the UK was “acting unilaterally to provide clarity”.
  • Brussels has held back, seeking more clarifications from the UK over whether it will stray too far from European norms. It will only let EU institutions access UK markets if it is “in the EU’s interests”. Without a reciprocal approach, Ms Delfas acknowledged that brokers and fund managers could suffer.
  • In practical terms, some EU bank branches in London would not know which set of rules on derivative counterparties they must comply with — causing uncertainty and potential disruption to trades. A lack of agreement on data may also mean disruption to UK financial groups operations, Ms Delfas said.
  • Although the UK government has legislated so that British firms can lawfully send personal data into the EU, Brussels has not completed its assessment of UK data protection. As a result, Ms Delfas said the FCA is advising financial services companies that they will need new clauses in contracts to ensure data can flow from the EU to the UK.
  • Lawyers said most of the post-Brexit risks would hurt EU banks and fund managers more than British counterparts. “Most large UK firms have planned to avoid these cliff edges by setting up in the EU after Brexit, and putting the right terms in customer contracts,” said Simon Morris, a financial services partner with law firm CMS.