The British government official who is overseeing British trade policy across the U.S. told a SIFMA symposium in New York Thursday that the U.K. will “definitely not” invoke Article 50 of the Lisbon Treaty to begin the process of exiting the European Union before the end of this year.
Antonia Romeo, U.K. Consul General in New York and Director-General Economic & Commercial Affairs USA, also said the U.K. will not follow any existing model in its exit, presumably referring to the different EU arrangements with Norway and Switzerland, which have access to the single European market but are required to abide by some of the EU’s laws.
Romeo said the U.K. wants to enter exit negotiations from a position of great strength before invoking Article 50, which starts a two-year clock to exit the EU. “The process is very complex [and we] will take the time needed to get it right,” said Romeo.
Before those negotiations begin, SIFMA, along with the American Bankers Association, the Financial Services Forum and Financial Services Roundtable, said in a letter to U.S. Treasury Secretary Jacob Lew that they encourage U.K. and EU policymakers to include a transition period before Brexit takes place. The groups explained that U.S. financial firms need “ample time” to adapt to new trade and investment relationships.
“Brexit, if not managed effectively, represents a significant risk to the financial markets and global economy,” the letter stated.
In the letter, the trade groups also urged Lew to encourage his U.K. and EU counterparts to:
• Be transparent as possible in their negotiation.
• Consult with stakeholders from the U.S. and international financial firms that have business in the U.K. and EU, as well as with U.K. and EU firms that have significant operations in the U.S.
• Establish a timely, provisional transitional arrangement to help financial firms adapt to any institutional or legal changes underpinning EU/U.K. trade and investment relationships, which could help firms “ensure continuity of service to customers … [and] limit the potential negative impact on financial stability.”
• Embed future arrangements in global standards such as those initiated by the Bank of International Settlements, Financial Stability Board and the International Organization of Securities Commissions.
The leaders of 27 European Union nations are scheduled to meet Friday in Bratislava, Slovakia, to begin discussions about the shape of the EU. The U.K. was not invited.
Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics, told the SIFMA Symposium, that there is currently “no consensus” within the U.K.—among the electorate and in the ruling Conservative Party—about what type of new arrangement the U.K. should seek with the EU.
“May is stalling for time,” said Kirkegaard, referring to Prime Minister Theresa May, leader of the Conservative Party, who took office soon after the Brexit vote. “She won’t get away with this for much longer. She may well be forced by domestic pressure to get the ball rolling.”
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