"The financial industry is a regulated industry, and everyone was very quick to come to the conclusion that exercising this activity was not going to be without consequences,” explains Luxembourg for Finance (LFF) CEO Nicolas Mackel. “Everyone understood that, if the UK left the internal market, it would lose its European passport, and that it would therefore be necessary to prepare to request licenses--or authorisations--in other EU countries.”

While the UK withdrawal date of 1 January 2021 is rapidly approaching, the steps to maintain activities were launched a long time ago by players in the finance sector. “Many had prepared themselves for the first date, in March 2019, not taking the risk of not being able to continue serving their clients. Since 2016 and 2017, decisions were made regarding relocations. Those most lagging behind did so in 2018, but almost everyone was already prepared,” Mackel says.

Forgotten financial services

If the sector benefits from a more secure environment, it is partly because its actors "understood that the subject would not be part of the negotiations". The Chequers plan launched by former British prime ministerTheresa May, which in 2018 exposed the type of relationship that could exist between the two blocs after Brexit, did not address financial services.

“In the first agreements, on the structure of negotiations, there was almost nothing. And today, when it is discussed, it’s marginal," Mackel says. This has prompted the financial services industry to leave nothing to chance, planning for any possible scenario. "In reality, for the financial sector, there was only one scenario, that of a hard Brexit, since it was the one that would have upset the balance the most," adds Mackel.

Important negotiations

Although the sector was not in itself part of the final negotiations, they are nevertheless of particular importance. "The current negotiations are important, as the agreement at the end of the process will, if all goes well, create an atmosphere for looking ahead and building bridges between London and the continent. Conversely, if it ends with doors slamming, there will be little motivation on the part of the head of the Commission to grant measures to facilitate the exchange of financial services in both directions,” the LFF CEO adds.

But the sector is clearly not there. “Everyone is very optimistic, especially since the election of Joe Biden in the US. There will be an agreement. It’s not 100% certain, but the chances are good. However, we will have to be careful, because there are always possibilities of stumbling, at the level of questions of state rules or interpretation," according to Mackel.

This article was originally published in French on Paperjam.lu and has been translated and edited for Delano.