(Bloomberg) -- The European Union’s chief Brexit negotiator rejected the U.K.’s latest proposals for financial firms to do business with the 27-nation bloc, raising the stakes just six months before the end of the status quo.
Michel Barnier dismissed Britain’s desires, which he said would let firms keep operating from the City of London, with employees flying in and out of the EU for short business trips. The proposals could even “create a significant risk” of avoiding regulation altogether.
“There is no way member states or the European Parliament would accept this!” Barnier said on Tuesday in the speech to the Eurofi financial conference. The U.K. “would like to make it easy to continue to run EU businesses from London, with minimal operations and staff on the continent.”
In negotiations on their overall future relationship, the U.K. and EU have made next to no progress despite talking since March. A fresh round of talks started on Monday, with both sides vowing to move forward in an attempt to get a deal before October.
Wall Street banks and the finance industry have pressed hard for the ability to continue using their London hubs for investment banking and trading business with European clients. With pre-Brexit rules set to expire in December, banks are re-activating plans to move staff and business if the two sides can’t reach a new market access arrangement.
Meantime, the so-called equivalence process through which the EU can open access to London firms has run into trouble, Barnier said. Under the EU’s equivalence rules, foreign firms can be given access to the bloc only if officials in Brussels think the rules are tough enough in the companies’ home state.
While the two sides committed to make progress in their equivalence assessments by this month, Barnier said the U.K. has answered only 4 of 28 EU questionnaires on regulations.
“These assessments are particularly challenging,” Barnier said.
The U.K. has consistently argued that the regulations start at the same place in both jurisdictions, which should make the equivalence process simpler.
“The U.K. has been able to complete our own assessments on time and we are now ready to reach comprehensive findings of equivalence as soon as the EU is able to clarify its own position,” a U.K. Treasury spokesperson said.
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