Please see below for today’s update on key Brexit news items:

  • A “transition period” after the UK leaves the EU should not continue beyond 31 December 2020, Brussels says. The UK has said the temporary arrangement should last for about two years after Brexit in March 2019. As it publishes its guidelines for the next phase of the Brexit negotiations, the EU says the UK will have to continue to follows the EU rules and cannot adopt an “a la carte” approach (the BBC).
  • UK financial regulators threw down the gauntlet to their EU counterparts, saying on Wednesday they would keep the UK’s financial system open to foreign institutions after Brexit even as Brussels hardens its stance towards the City of London. In a move to maintain London’s status as a global financial centre after Britain leaves the EU, the Bank of England said it would allow European-based investment banks that access the City through their branches under an “EU passport” to apply for new regulatory licences much like those enjoyed by their US or Japanese rivals (the Financial Times).
  • Political uncertainty arising from Brexit is weighing on growth, but a quick agreement on a transitional deal will bolster the UK’s economic prospects, according to the International Monetary Fund. The world’s lender of last resort lowered its estimate for UK GDP growth in 2017, downgrading it from from 1.7pc to 1.6pc, and predicting a slowdown to 1.5pc in 2018. Christine Lagarde, the IMF’s managing director, said that the organisation’s warnings about growth ahead of the referendum have been borne out. But she added that there are causes for optimism, as long as a deal is struck quickly (the Telegraph).
  • Theresa May has said that an amendment to the EU withdrawal bill allowing the government to change the date of Brexit will be used only in “extremely exceptional circumstances”. May was pressed during PMQs on Wednesday by two strongly pro-Brexit Conservative MPs over the amendment, which ministers hope will avoid another defeat on the bill for the government later on Wednesday (the Guardian).
  • Mark Carney has rejected suggestions from the EU’s top Brexit negotiator that a special trade deal to include financial services is impossible as Britain ramps up its efforts to safeguard the City’s future. The Bank of England governor told MPs that a bespoke trade deal between the UK and EU could cover financial services, directly contradicting comments made by the EU’s chief Brexit negotiator Michel Barnier (the Telegraph).