Michel Barnier: UK Banks Will Lose ‘Passporting Rights’ After Brexit

The European Union’s chief Brexit negotiator has said that after Brexit, British banks are set to lose “passporting rights” to do business in the European Union.

In a speech in Brussels on Monday, Michel Barnier stated that “Brexit means Brexit” – and that there could be no opt-ins to some parts of the single market for specific industries.

In a major speech to a think-tank, Barnier said: “On financial services, UK voices suggest that Brexit does not mean Brexit. Brexit means Brexit, everywhere.

“The legal consequence of Brexit is that the UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.”

Barnier’s  statement is bad news for the City, where more than 5,400 British firms depend on passporting rights to generate £9bn in revenue every year to Britain. The British Bankers’ Association (BBA) has said that the loss of passporting would be “disruptive, costly and time-consuming.”

The statement also comes the same day as the European Union announces where it will be relocating the European Banking Authority, an agency of the European Union that is currently based in London, after Brexit.

The chief negotiator said that the European Union might judge some rules of the United Kingdon as “equivalent” to the passporting rights of the European Union. However, he ruled out City of London having some access to financial markets of the European Union under the same passporting deal as of now.

Barnier informed the audience at the Centre for European Reform that “those who claim that the UK should pick parts of the single market must stop this contradiction. The single market is a package, with four indivisible freedoms, common rules, institutions, and enforcement structures.

“The UK knows these rules very well, like the back of its hand. It has contributed to defining them over the last 44 years with a certain degree of influence. We took note of the UK decision to end free movement of people, and this means clearly that the UK will lose the benefits of the single market.

“This is a legal reality; the EU does not want to punish, it simply draws the logical consequence of the UK’s decision to take back control.”

Also ruling out a carve-out for the financial sector, Barnier seemed to suggest that there could be no special deal for the car manufacturers of the United Kingdom to stay in the single market, as indicated by industry bodies.

In the same speech, the senior official of the European Union also voiced out disappointment at what he implied as a fixation in some British circles on a “no deal” being a viable option for the United Kingdom.

“We have a shared history and this started long before the last 44 years. This is why the no deal is not our scenario, even though we will be ready for it,” said Barnier.

“I regret that this ‘no deal’ option comes up so often in the UK public debate. Only those who want to ignore the current benefits of EU membership can say that no deal would be a positive result.”

Vince Cable, the Liberal Democrat leader, said that the decision was a “major blow” to the Brexit plans of the Government.

Cable said: “Loss of this access risks blowing a hole in the budget at a time when our public services are already seriously underfunded.

“All of this could be avoided if the Government chose to stay in the single market.

“Instead, ministers seem intent on killing the golden goose by choosing an extreme form of Brexit that will seriously damage the financial sector.”