The UK Prime Minister Boris Johnson has admitted that the Brexit trade deal failed to meet his ambitions on financial services, as Brussels signalled that the City of London must wait until after January 1 to learn what market access it will have in the future, reports the FT.com.

The Johnson government intends to set out its plans for how to use Britain's new regulatory freedom to diverge from the bloc's rules — including on financial services — but has yet to provide details. The two sides' new trading relationship will take effect on Jan. 1, assuming the treaty is passed by the UK parliament next week and that the EU approval processes proceed smoothly.

Johnson told the Sunday Telegraph that the 1,200 page treaty "perhaps does not go as far as we would like" on the matter of financial services. Chancellor Rishi Sunak said on Sunday that the UK would seek to "do things a bit differently" on financial services after it had left the single market.

The EU has made it clear that the UK will need to wait until after Jan. 1 to learn what market access rights its financial services companies will have in the future, warning that this will hinge on the extent to which Britain diverges from EU standards. Thus Britain is set to begin its new relationship with the EU with fewer equivalence rights in place than other financial centers, such as New York and Singapore, meaning the UK will have to rely on more cumbersome and limited access arrangements, the FT writes.

"A series of further clarifications will be needed [from Britain], in particular regarding how the UK will diverge from EU frameworks after 31 December," the European Commission said in an explanatory document on the trade deal issued on December 24.

"For these reasons, the Commission cannot finalize its assessment [...] and therefore will not take decisions at this point in time. The assessments will continue," it said. 

The EU and UK have agreed that decisions on access to each others' markets in financial services will be based on each side declaring unilaterally that the other side's regulatory systems are "equivalent" to its own.

English Edit: Nielsine Nielsen

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