Businesses on both sides of the Channel are fighting for a strong future relationship

A week is a long time in politics, but the last seven days have felt like an age.

The postponement of the Brexit vote, the Prime Minister’s trip to Brussels to try to secure further concessions, then her survival of no confidence by Conservative MPs in the span of a week is remarkable even by recent volatile standards.

It is in this context that I spoke at a joint London and Berlin Chambers of Commerce event last week. We have a very strong relationship with German businesses, many of which have a big presence in the City.

But, of course, everything is overshadowed at the moment by Brexit.

When it was announced, the City Corporation welcomed the agreement between the UK and the EU as a step forward, for three reasons.

First, we have said all along that a no-deal Brexit would be in nobody’s interests, and would pose risks to the smooth running of financial markets. Despite extensive contingency planning, there are still significant risks to EU businesses and their consumers which cannot be resolved by the private sector alone.

Second, we have long argued that it is vital for a transition period to be secured, to allow the sector time to work through what is bound to be a complex process of change.

And third, we need a basis for negotiations for the future.

The proposed framework for the future relationship between the EU and the UK would offer some clarity, especially the commitment to close regulatory and supervisory cooperation, which recognises the City’s unique role in providing services to households and businesses across Europe.

We also welcome the calls from German business groups like the BVI and the Deutsches Aktieninstitut to maintain open access to London’s financial markets and to improve the EU’s equivalence regime for third countries.

More work would, of course, be necessary. There is wide consensus that the current proposals – which are partial, political, and revocable – will not be sufficient for the unique relationship that the EU and UK should have post-Brexit.

Improving the coverage, the certainty, and the fairness of this model should be a priority for the negotiations which are set to come.

However, all this talk of the advantages or disadvantages of the deal overlooks the vital fact that it is far from clear whether it will be approved by parliament. We therefore need to focus on the possibility of a no-deal Brexit and the cliff-edge risks that would entail.

For the financial sector, these include operation of clearing houses, continuity of contracts and cross-border data flows.

It has been good to hear organisations like Bafin in Germany calling for pragmatic solutions on these issues. The European Securities Committee’s decision last week – which is expected to be confirmed by the European Commission on Wednesday – of a temporary equivalence decision to allow for the recognition of UK central counterparties in the case a no-deal was another very welcome step.

Of course, I hope it does not get to that stage and that a deal is secured before the UK leaves the EU. Then we can focus on negotiating that long-term relationship which provides as much access and as little disruption as possible for the benefit of both sides of the Channel.