Unrestricted two-way business regulations between the UK and EU come to an end in December 2020. Over 1,441 EU based firms had applied to the Financial Conduct Authority (FCA) for temporary permissions to operate in the UK after Brexit. For most of these businesses, it will be the first time they have had an office in the UK.
The figures were obtained via a Freedom of Information request from regulatory consultancy Bovill.
Michael Johnson, a consultant at Bovill said: “These figures clearly show that many firms see the UK as Europe’s premier financial services hub.”
City A.M. reported that Bovill’s figures show that 228 Irish firms had applied for temporary permissions to keep serving British clients while they obtain full regulatory authority to establish a new UK office.
Dublin is a popular location for UK-based asset managers and insurers to establish EU hubs, due to the strong ties between the two countries.
Financial services firms from France, Cyprus and Germany have applied for 170, 165 and 149 temporary permissions respectively.
Bovill partner Ed O’Bree said: “In practical terms, these figures mean that European firms will be buying office space, hiring staff and engaging legal and professional advisers in the UK,” s
“This augurs well for the UK economy, as the country will retain its reputation as a prime location for financial services in Europe.”
The firms have applied to operate in the UK under the Temporary Permission Regime (TPR), allowing companies from the bloc to operate in the UK while they seek full permission from the FCA.
In return, large UK financial firms have implemented plans to allow them to continue operating in the EU after Brexit.
After Brexit, it has been estimated that 7,000 financial jobs will be relocated to the EU after Brexit.
This could create a further 2,400 jobs in EU financial hubs when certain city positions relocate.
With Brexit expected to happen smoothly on January 31, the following 11 months is expected to see frenetic activity to establish at least an outline trade deal by December 2020.
But Boris Johnson has already signalled that he intends for the UK to diverge in many areas from EU standards and systems as it seeks a business advantage over the continent.
An EU source has described how the EU could withhold important financial data from UK based firms post-Brexit, speaking recently to the Times they said: “These are both big levers for the EU.
“Data adequacy and equivalence are decisions under our direct control, decisions that can be reversed at any time and that will be linked to progress in the wider negotiations.”
If the two sides cannot hammer out an agreement they can both live with by the end of December next year the UK would leave the transition period, a post Brexit buffer zone, without a trade deal in place
This would mean firms would do international business under World Trade Organisation (WTO) rules until a deal can be agreed.
The Brussels post-Brexit plans suggest that it would allow UK finance firms access to European markets as long as they continue to adhere to EU regulations and standards of practice.
This would contradict Boris Johnson’s plans for UK financial regulations to diverge from EU standards.
Rules have been imposed to allow the EU to block the UK’s access to the financial markets in the continent with just 30 days notice if the situation has changed.
These could be political changes sparked by law changes introduced in Westminster designed to give UK firms a better chance of thriving on the world stage.
The EU is also said to be considering an “adequacy” block on personal data across the channel.
This could impact service sector companies and potentially security co-operation.
In December Mr Johnson put the UK on the path to a showdown with Brussels after he refused to be shackled to the bloc’s rules in the future.
After the Prime Minister’s withdrawal deal sailed through the Commons he told MPs that the ‘oven was on’ when it came to delivering Brexit next year.