The government is no longer seeking mutual recognition as the basis for the City’s future trading relationship, its Brexit blueprint revealed this morning.

Despite chancellor Philip Hammond having made an impassioned speech defending mutual recognition and rejecting equivalence as a land grab in which the EU could have final say on access just three weeks ago, the government is now proposing “expanded” equivalence to underpin financial services.

But in the near-100-page document, published moments ago, the government outlines its vision for a “new economic and regulatory arrangement based on the principle of autonomy for each party over decisions regarding access to its market”.

Existing frameworks for equivalence would need to be expanded “to reflect the fact that equivalence as it exists today is not sufficient in scope for the breadth of the interconnectedness of UK-EU financial services provision”, it added.

Internally this new “reciprocal recognition of equivalence” is viewed as a halfway house between mutual recognition and enhanced equivalence, City A.M. understands.

Should access be withdrawn for some reason, the white paper says there should be a “structured withdrawal process including a period of consultation”, with clear timelines and notice periods that are "appropriate for the scale of the change before it takes effect".

Mutual recognition will still be applied to professional qualifications as the government seeks to maintain the status quo for business recruitment.

Movement of people

It also plans to seek a reciprocal deal with the EU allowing UK nationals to visit the EU without a visa for short term business reasons and vice versa. This would permit "only paid work, in limited and clearly defined circumstances, in line with the current business visa policy," the white paper said.

Companies will still be able to train and "deploy expertise where it is needed" and the government will seek the "temporary mobility of scientists and researchers, self employed professionals, employees providing services as well as investors".

Goods and customs arrangements

The white paper also reiterates the points from Theresa May's Chequers agreement – namely a free trade area for goods, subject to a common rulebook, with a phased introduction of the facilitated customs agreement.

It is thought this phasing will be along the same lines set out by HMRC boss Jon Thompson when he said that the new customs partnership – an earlier iteration of the proposed model – would take five years to get up-and-running.