DAVOS The British government is supportive of a three-year transition period for the financial sector once Britain leaves the European Union, Barclays Chairman John McFarlane said on Thursday.
“I think the government does [support it] because I think they understand the complexity of this,” McFarlane told Reuters on the sidelines of the World Economic Forum in Davos.
The initial stage of divorce talks will last two years until 2019, after which a transition phase, of, say, three years, would begin. Many questions remain unanswered, however, as to how this would work in practice.
Financial firms have accepted that they will lose their ‘passporting’ rights to freely sell services across the 28-nation bloc when Britain leaves, but want more time to adapt before they lose full access to the single market.
“We have known for months that passporting is not going to happen,” said McFarlane, who is also chair of financial industry lobby group TheCityUK.
“We want a standstill arrangement for three years, that would kick in after the government’s negotiations on Brexit are finalised,” he added.
Prime Minister Theresa May confirmed this week that Britain would quit the EU single market when it leaves the European Union, setting a course for a clean break with the world’s largest trading bloc.
She also signalled for the first time that she strongly believes in a transition phase but banks are not relying on that happening, instead planning for a worst-case scenario that would see them lose access to the single market once Brexit kicks in, expected in the first-half of 2019.
Brexit minister David Davis said on Wednesday companies will only have a maximum of a two-year transitional deal to help smooth Britain’s exit from the EU after 2019.
May said in her speech on Tuesday the length of any such deal may vary for different industries.
McFarlane said international and British banks, insurers and asset managers were seeking a bespoke deal with Europe that would give ‘mutual recognition’ to as many of their products and services as possible.
Barclays will keep the bulk of its activities in Britain after the UK leaves the EU, Chief Executive Jes Staley told BBC radio on Thursday.
UBS and HSBC <HSBA.L, two of Europe’s biggest banks warned on Wednesday that they could each move about 1,000 jobs out of London.
Major banks including Goldman Sachs, JPMorgan and Barclays, are keen to keep their dealing rooms, which buy and sell bonds, shares and other securities and employ thousands of people, in London.
May will meet with the chief executives of some of Wall Street’s largest firms including Goldman Sachs, JPMorgan, Bank of America and Morgan Stanley as well as money manager Blackrock and private equity firm Blackstone in Davos later on Thursday, according to sources familiar with the matter.
Representatives for the firms either declined to comment or could not immediately be reached for comment.
(Reporting By Carmel Crimmins, writing by Lawrence White; Editing by Keith Weir)