The UK’s hugely important financial services industry, which includes the country’s £10 trillion asset management industry, is being largely ignored during the country’s post-Brexit trade negotiations, putting it – as well as the entire UK services sector – at risk of reduced access to its most important markets and lasting damage.
Since the Brexit referendum vote in 2016 over a £1 trillion of assets have already been transferred from the UK to the remaining EU27 countries and more is likely to be transferred if no deal is reached by the end of the year.
According to a report by the UK in a Changing Europe think-tank, the services sector which accounts for around 80% of the UK economy, has been largely missing from UK-EU trade negotiations which entered their fourth round this week.
The report, Services and Brexit, raises questions about the economic price the UK government is willing to pay through decreased single market access to ‘take back control’ over the rules and regulations shaping the services sector.
Both Theresa May and Boris Johnson paid little attention to the services sector in the Brexit negotiations, the report found, despite the fact that it accounts for some 30 million jobs.
The report said that services, including financial services, are highly dependent on EU migrant workers and staff shortages are looming when the free movement of people comes to an end at the end of 2020.
Professor Anand Menon, director of the UK in a Changing Europe, said: “It is worrying that the biggest sector in the UK economy – accounting for more than 80% of it – has been the subject of so little focus in the UK-EU negotiations.
“This serves to underline the largely political nature of the government’s Brexit priorities, focussed on regulatory autonomy rather than any economic implications of this.”
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