The U.K. cannot hope to retain its financial passporting privileges if it pursues a so-called "hard Brexit" that involves a withdrawal from the European Union's single market, according to Valdis Dombrovskis, the vice president of the European Commission.
"The issue is quite clear. EU passports are linked to the EU single market. So if the intention of the U.K. is also to leave the single market then indeed U.K. financial institutions cannot have EU passports," declared Dombrovskis, who is also the European commissioner for the euro and social dialogue, speaking from Brussels on Thursday.
So-called passporting rights allow financial services firms within the EU to run operations and offer services throughout the European Economic Area.
During 2016, financial and insurance services contributed £124.2 billion ($157.46 billion) in gross value added (GVA) to the U.K. economy, which amount to 7.2 percent of the total, according to official government data published by the House of Commons. 51 percent of the GVA was generated in London. The sector also provides over 1 million jobs throughout the country.
Given the industry's importance, the question of what becomes of the U.K.'s passporting rights once it leaves the EU is high on the agenda as a key discussion topic for exit negotiations.
Source: Bloomberg
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