EU may offer post-Brexit UK 'improved equivalence' for financial services

Addition to Monday's agreement reads: “Equivalence mechanisms and decisions remain defined and implemented on a unilateral basis by the European Union”

Although EU will consider making offer, it would be able to rescind any agreement at short notice. Hannah McKay/Reuters

The European Union will consider offering the UK “improved equivalence” for financial services, according to the latest draft of its negotiating guidelines for the post-Brexit trade agreement.

The addition, which will be debated at a meeting of ministers on Tuesday, makes clear that the equivalence mechanism would still be unilateral - meaning the EU could rescind it at short notice.

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“Regarding financial services, the aim should be reviewed and improved equivalence mechanisms, allowing appropriate access to financial services markets, while preserving financial stability, the integrity of the single market and the autonomy of decision making in the European Union,” reads the draft, obtained by Bloomberg.

“Equivalence mechanisms and decisions remain defined and implemented on a unilateral basis by the European Union,” it says.

The UK is pushing for a system of mutual recognition and wants a set of rules that are more durable and not subject to unilateral withdrawal. Banks are also lobbying for something better than equivalence.

But the EU has said the UK’s decision to leave the single market means it can’t pick and choose the bits of the EU internal market where it wants to maintain access.