At a recent Brussels Briefing on Brexit at EY in Dublin, Brian Hayes MEP called for a transitional period that would benefit all parties in the Brexit negotiations. Opening on a positive note for Dublin, Hayes noted that Ireland was the runner up in the race for the new headquarters of the European Banking Association. Although Dublin eventually lost out to Frankfurt, the closeness of the race suggested that Ireland is taken seriously as a major player in financial services on a European stage.
Hayes stated the Brexit negotiations are not progressing well, and with the 14 December deadline for decisions on the next phase of talks approaching quickly, this is a major concern for the commission. In order to move past this “stand still”, Hayes argued that a new sequencing needs to be put in place and that the UK needs to put up more money.
In order to limit the impact on financial services, particularly in Ireland, he said that what is needed is a transition period followed by a “Super” equivalence regime. However, the confirmation and timing of the transition period will not be known until the end of the negotiations meaning that for financial services firms, there is no time to wait for this outcome, and companies should by this point have already started their post Brexit preparations.
The transition period is crucial to allow financial services to get their business in order but it is also important for regulators to prepare for this significant influx of new organisations.
Hayes said that it is important for international financial institutions to accept that the concept of passporting through the UK is now gone, and that the establishment of an EU hub outside the UK is a necessity to continue doing business in the EU. More importantly, an EU Hub with senior people is a requirement of the regulator.
Ireland’s aim within the next 10 years should be to become a part of the Eurozone “core”, aligning ourselves closely with the big players and offering more to EU. For example providing more emphasis on climate change, building out the capital markets space and helping more with migration.
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