European Union and British Union Jack flag flying in front of the Bank of England as symbols of the financial repercussions of the Brexit EU referendum ()
A leaked document produced by Magic Circle law firms Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters has revealed that the U.K. finance industry wants the British government to allow it to remain subject to European Union laws for up to five years after Brexit.
The report, produced for a group of large banks with U.K. operations and seen by Reuters, says that such transitional arrangements are “likely essential” in order to avoid damaging a British economy that is “reliant upon uninterrupted access to financial services.”
The document says the U.K. government should accept EU law in financial services for a minimum of three to five years post-Brexit or risk banks shifting business away from the country, according to Reuters. If no deal is struck, the finance industry may struggle to adapt quickly enough due to regulators being overwhelmed by simultaneous requests from banks to restructure their operations, it adds.
Reuters says that the report, which one banker described as a “heavyweight” piece of legal work, has been shared with the U.K. government.
Clifford Chance, Freshfields and Linklaters all declined to comment.
A number of politicians and business groups have called on the government to secure transitional arrangements with the EU in order to minimize disruption to business and the economy.
It was recently reported that Bank of England governor Mark Carney was working on a secret deal that would see British businesses retain access to the European single market for at least two years after the country leaves the EU.
There are fears the Brexit vote could result in banks and other companies, including global law firms, transferring business from London to other European cities. Financial institutions are particularly concerned about a potential loss of access to the EU single market, which many rely on to run European trading operations out of London.