Lobby groups in Brussels have urged financial services groups to be prepared for last week’s withdrawal agreement between the UK and EU to be rejected.

The EU and UK last week struck a draft agreement on the UK’s withdrawal from the European Union, which was broadly welcomed by the financial sector for its recognition of the importance of financial services to the future relationship between the two parties.

Wim Mijs, chief executive officer of the Brussels-based European Banking Federation (EBF), said the agreement “recognises the importance of financial services, underlining the need to maintain financial stability, market integrity, investor protection and fair competition”.

However, the EBF also stated that the industry needed to be ready if the current deal failed to clear the EU and UK parliaments.

“Proper preparations must be taken by both governments and companies to ensure that citizens are not negatively impacted by Brexit,” it said.

The EBF also proposed a transition period of at least five years to allow for “future cooperation to be properly concluded”. The current deal’s transition period runs until 2021.

The federation recommended in favour of the UK retaining some “fundamental protections that exist in the current shared EU financial regulatory framework”, including Solvency II, MiFID II and EMIR.  

Finance Watch, a collaboration between unions and consumer groups, also recommended that companies and governments should be prepared for the draft withdrawal agreement to be rejected. Many UK politicians have indicated they would not back the agreement that was presented to them last week.

Finance Watch’s research and advocacy officer, Paul Fox, told IPE that the UK and EU governments should “prepare by extending the withdrawal period under Article 50, if necessary”.

He added that “properly protecting citizens should be the first aim” of future regulatory co-operation.

Simon Lewis, chief executive of Association for Financial Markets in Europe (AFME), agreed that it was “still important for the Commission and member states to clarify steps to mitigate cliff edge risks in a no deal scenario”.

Delayed transition?

In a more detailed summary of the withdrawal agreement, the Centre for European Reform, a London-based think tank, said Theresa May had ruled out extending the negotiating period.

“But she could always change her mind,” added Charles Grant, director of the think tank. However, he said the EU would likely be reluctant to agree to such as step given European Parliament elections in May 2019.

Donald Tusk, European Council president, has stated that, “if nothing extraordinary happens”, a Council meeting to formalise the Brexit withdrawal agreement was set for Sunday 25 November.

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