The Future of U.K. Banking Rests on a Process Run by European Politicians 

Even with Brexit done and a trade agreement sealed, the U.K. and European Union are still jockeying over the future of financial services. The City of London’s unhindered access to European markets -- and with that, its standing as a global financial hub -- hinges on a process controlled by politicians and technocrats in Brussels known as “equivalence.” The EU has been in no rush to move things along, while the U.K. is signaling that it intends to veer from the bloc’s rules and will not accept equivalence at any price.

That’s hard to say. Although the two sides have drawn up ground rules for cooperation in financial services and agreed to establish a forum to discuss regulation, the new guidelines will not cover market access and there is no deadline for decisions on equivalence. The EU granted two big equivalence decisions to the U.K. in 2020, but with 28 areas still open, it’s unclear how much investment banking business can stay in Britain. European Commission President Ursula von der Leyen declared in 2020 that “all will change” in the City of London’s relationship with the EU, underlining how politicians are under no obligation to maintain close ties with each other.