Business Irish

Saturday 17 March 2018

UK set to give up on single market access

Britain's Chancellor of the Exchequer Philip Hammond Photo: Dominic Lipinski/PA Wire
Britain's Chancellor of the Exchequer Philip Hammond Photo: Dominic Lipinski/PA Wire

Svenja O'Donnell and Donal O'Donovan

Britain's Chancellor of the Exchequer Philip Hammond is ready to accept that Britain may have to give up membership of the European Union's single market - but not UK banks' crucial 'passport' to EU clients - to achieve immigration restrictions that voters have demanded, according to two officials familiar with his thinking.

The surprise position will be a blow to Irish Government hopes of limiting the fallout from the Brexit vote, by keeping two-way trade between the two countries as open as possible.

In the UK, however, restricting immigration appears to be taking political priority over trade relations with the rest of Europe, with Prime Minister Theresa May's government staking its credibility on regaining control over UK borders.


Mr Hammond considers it unrealistic to retain membership of the single market after Britain leaves the EU, officials said, speaking on condition of anonymity.

Instead, British officials are drawing up their own blueprint which they hope will allow Britain's financial services firms to retain access to Europe, they said.

Hammond's plan hinges on the argument he set out earlier this month that London as a financial centre is too valuable for the EU to jeopardize, since many European companies use its markets to raise capital.

EU rules allow lenders in any member to provide services and raise funds across the union.

A British Treasury spokesperson said in a statement that its position is clear and that it wants Britain to remain a great place for financial services. It stands ready to help the sector maximize the opportunities that leaving the EU presents, the spokesperson added.

That would be a lose-lose for Ireland, which would suffer from any trade barriers blocking access to the key UK market without being in a position to gain from any financial services investment pushed out of the City of London as a result of Brexit.

In the meantime, however, the 'Sunday Telegraph' in London reported yesterday that top British law firms, insurers and asset managers have appointed property agents to seek new offices in Dublin, in case so-called 'passporting' of services into the EU is blocked.

Bulge bracket law firms Freshfields, Slaughter and May, and Allan and Overy are thought to be among companies making inquiries, though it's unclear whether companies are seeking to transfer back-office staff to a cheaper location or looking at large-scale moves.

EU officials have said Britain can't cherrypick by staying in the market and curtailing freedom of labour movement.


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