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UK financial sector will be largely cut off from EU for years, EU lawmakers told

UK financial sector will be largely cut off from EU for years, EU lawmakers told

The long-delayed forum for European Union and British financial regulators won't reopen the door for London's financial centre to the bloc, EU lawmakers were told on Tuesday.

The Windsor agreement on EU-UK arrangements for Northern Ireland will mean that the delayed UK-EU memorandum of understanding (MOU) for a regulatory forum will be implemented, raising hopes of improving market access later on.

"This could really unlock cooperation, but it's our view there won't be that many material changes coming out of the MOU and the regulatory forum in terms of cooperation between the UK and the EU," Thorsten Beck, director of the Florence School of Banking and Finance, told the European Parliament.

"It's more like a long term process going forward."

Beck and Christy Ann Petit, assistant professor at Dublin City University, were being questioned by lawmakers over a report they wrote for the EU parliament on post-Brexit financial services in Britain.

Britain is struggling with identifying post-Brexit growth opportunities and the prospect of regaining broad access to the EU financial market is limited, the report said.

While Britain has begun to downplay the need for major divergence with the EU, the EU has proposed a draft law to force banks and asset managers to shift chunks of euro derivatives clearing from London to the EU.

Beck said there was a tension between the UK government pushing for a globally competitive financial sector, and UK regulators focusing on financial stability.

"There will be pressure on regulators to compromise stability in favour of competitiveness at some point," Beck said.

Britain's finance ministry has said it won't "unlearn" lessons from the global financial crisis or undermine the independence of regulators to keep the financial system stable and protect consumers.

Petit said she did not expect major divergence between EU and UK rules, given Britain seeks to comply with international financial rules.


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