Deloitte comments on the UK Political Declaration
26 November 2018
David Noon, Global Head of Brexit at Deloitte, said: “Businesses need to look at the political agreement carefully. While this is one less hurdle to clear, and it gives a general direction of travel, there’s still no clarity on services and a range of technical points. There is a job to do to turn the political agreement into a comprehensive trade agreement. Companies will need to maintain their vigilance in planning for a range of all possible scenarios, even if ultimately they’re not needed.”
David Strachan, financial services Brexit partner at Deloitte, said: “The political agreement has just three paragraphs on financial services. While this is arguably better than no paragraphs at all, some will question just what it amounts to. Much of what is in there confirms what we know, that for financial services the future relationship will be based on equivalence. It is positive that the EU and UK will endeavour to complete equivalence assessments before end-June 2020, and that they are agreeing to consult on decisions to adopt, suspend or withdraw equivalence decisions. However, “completion” doesn’t necessarily mean reaching a positive decision on equivalence. There is no mention of whether the equivalence decisions will be based on the current approach; something that improves on the status quo, along the lines of what the UK’s White Paper proposed; or something that’s tougher than today, reflecting some of the proposals currently working their way through the EU’s legislative process. Finally, there’s a prudential carve-out, which in effect means both sides can do whatever they want if they decide a prudential measure, such as capital or liquidity, is necessary.”
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