Treasury publishes FCA data showing over 8,000 companies authorised in other EU states use these rules to do business in UK

A fresh warning about the impact Brexit would have on the City has been issued after a powerful committee of MPs published data showing that almost 5,500 UK firms rely on corporate “passports” to conduct business across the EU.

Andrew Tyrie, chairman of the Treasury select committee, said the business put at risk if the UK lost its access to the single market – and associated passporting rights for individual companies – was significant.

The Conservative MP published data provided by the Financial Conduct Authority showing 5,476 UK-registered firms hold at least one passport to do business in another EU or European Economic Area member state. Just over 8,000 companies authorised in other EU states use these rules to do business in the UK – which could be seen as a sign that the passporting rules are also important to non-UK firms.

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“These figures give us an initial idea of the effects of losing full access to the single market in financial services. The business put at risk could be significant. Almost 5,500 UK firms are using passports to do business in Europe, and over 8,000 European firms are using passports to provide services in the UK,” said Tyrie.

The issue of passporting – which allows UK authorised firms banks and fund managers to conduct business in the other 27 states – has also been highlighted by the Bundesbank president, Jens Weidmann, who told the Guardian that UK companies would lose these rights if it did not remain part of at least the EEA (EU countries and Iceland, Liechtenstein and Norway).



This “hard Brexit” is favoured by some Conservatives although on Monday ratings agency Moody’s downplayed the impact, saying that while there would be a loss of business the impact would be manageable.

Weidmann said “passporting rights are tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area”.

Tyrie has published a pamphlet for Open Europe which argues the government must now set out what it hopes to achieve from Brexit talks and explain much of what was promised will come at considerable economic and fiscal cost.



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Tyrie said: “None of the current off-the-shelf arrangements can preserve existing passporting arrangements, while giving the UK the influence and control it needs over financial services regulation as it develops. Efforts to secure an appropriate arrangement for UK-based firms will be one of the most challenging aspects of the negotiations about the UK’s future relationship with the EU.”

He urged the Bank of England governor, Mark Carney, and the chancellor, Philip Hammond, to put the issue at the top of their in-trays. “No doubt the hard grind of establishing what best protects UK interests is already under way,” said Tyrie.

The Treasury select committee comprises both pro-Brexit and anti-Brexit MPs.

In a letter to Tyrie, Andrew Bailey, chief executive of the FCA said: “A passport is a mechanism through which firms may exercise their right to provide services and their right to establishment ... As such, a passport obviates the need to obtain separate authorisations from other member states.”