A Parting of the Ways – The Ending of a Beautiful Friendship?

D-day has once again arrived for Europe.

Seventy Five years after Allied troops stormed the beaches of Normandy in an action that began the liberation of Europe from Nazi occupation, the UK will officially “liberate” itself from the European Union.

While the UK will officially leave at 11.00pm GMT, the future relationship is still far from clear.

What is certain is as the two sets of negotiators begin talks, in an effort to shape a trade deal by the end of the year, the financial services sector is the biggest chip in the EU’s pile.

It will be a case of fish verses finance given the UK’s coastal fishing rights are the jewel that the EU has to access, whilst for the UK the ability to re-establish the free movement of financial services is vital given it remains the country’s biggest export.

The problem is that the UK is under intense pressure from a large proportion of its population to keep control of its waters. They seek a Norwegian style agreement where international vessels can use the waters under strict licence. Environmentalists support such a deal as they say the UK waters have been badly over fished by the huge floating factories employed by some nations.

Set this against this is the pressure the likes of the French and Spanish governments are under to ensure their fleets gain access to the waters and it is a recipe for trouble.

Last year French fishermen blocked UK fishing vessels accessing French waters and such action has only hardened the UK fleet’s resolve to ensure control is exercised.

London remains the global centre for world financial services and the UK will be keen to see that position maintained.

The secondary issue for the UK is the desire to move away from EU rules and with it Solvency II. It leaves the UK set for another battle over regulatory equivalency, agreement on which will be required to trade across the EU.

Word from Brussels is that financial services will be the very last part of any deal given the EU negotiators’ belief that it is the only carrot or stick that carries any weight with the UK.