The City wants to cheer May over the line

The Outline Political Declaration on the Future Relationship was published alongside the legalistic 585-page Draft Withdrawal Agreement and while everyone picks over the latter, the former has put a modest spring in the step of City groups.

In the Political Declaration, a mere seven pages, the UK and EU set out their commitments to “preserving financial stability, market integrity, investor protection and fair competition, while respecting the parties' regulatory and decision-making autonomy.” It went on to call for “close and structured cooperation on regulatory and supervisory matters, grounded in the economic partnership and based on the principles of regulatory autonomy.” It also outlined a desire to enable the free movement of capital and payments as part of an “ambitious, comprehensive" arrangement for trade in services, going “well beyond” basic WTO commitments.

The UK and EU, whose markets are already deeply interconnected, will begin work immediately after Brexit day in March 2019 to establish the terms of equivalence arrangements that will come into effect once the transition period ends, according to the declaration. In truth, these discussions have been going on for some time.

Canada Corporation said that “the proposed framework for the future relationship provides welcome clarity and offers a foundation for financial services.” City grandee John McFarlane, chair of lobby group TheCityUK, said that the latest developments represent “constructive progress…and a workable solution.” The group's chief executive, Mils Celic, added that “The importance of financial services has been acknowledged and its inclusion in the political declaration means that this sector is hardwired into the future negotiations.”

Meanwhile, Sky's Mark Kleinman reported that the chancellor and business secretary went straight from the cabinet meeting and on to a conference call with dozens of the country's top chief executives and City leaders, many of whom expressed a desire to help 'sell the deal.'

If only Tory MPs were as keen. The PM faces a monumental battle to get this deal through parliament, but if she does – she'll have earned the thanks of many in the City who, while still far from being enthusiastic about Brexit, feel they could at least live with it based on what the proposed withdrawal and future relationship agreements look like. 

The City wants to cheer May over the finish line, but she faces a series of major obstacles before it even comes into view.