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These are the City of London's Brexit priorities

Jan 12, 2017, 05:31 IST

Reuters / Eddie Keogh

LONDON - The UK should prioritise seeking a transitional arrangement and ensuring continued access to skilled EU labour during Brexit negotiations, according to a major lobby group for the financial services industry.

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A report released on Thursday by TheCityUK, which represents the financial services industry, calls for a "clear and upfront" transitional arrangement to deliver continuity in the financial sector.

A transitional deal

A transitional deal would see a bridging period between the time the UK exits the EU and the time it arranges a formal trading partnership with the EU.

The financial services industry, most associated with the City of London, is a vital part of the UK economy, and accounts for 9.6% of national economic output. The sector is keen for a transitional deal as it would help avoid "damaging cliff-edge effects," according to the report.

On Wednesday, Bank of England governor Mark Carney reiterated to MPs his desire for a transitional arrangement, telling the Treasury Select Committee that "a transition phase is the best mitigant to [the Brexit] risk, it's highly advisable. If there is not such a transition put in place, there will be consequences."

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Prime Minister Theresa May appears to be flip-flopping on the issue, but even the most hardline members of her cabinet - including Brexit minister David Davis - appear to be edging towards an agreement that a transitional arrangement may be necessary.

Access to EU talent

The report also says the UK needs access to EU talent to retain its status as a provider of low-cost capital to Europe.

It says: "To retain its status as the leading global financial centre, the UK needs continued access to the best talent: home-grown, from across the EU, and from the rest of the world. This is also critical to the UK's future strength as a successful exporter and provider of low-cost capital to Europe."

The government's looks set to take a hardline approach on EU immigration after Brexit. On Wednesday, Home Office minister Robert Goodwill said that the government that an "immigration skills levy" currently applied to skilled non-EU workers could apply to EU residents after Brexit.

In its current form, the levy would cost employers £1,000 per year to bring a single EU worker to the UK, which Goodwill said would "be helpful to British workers who feel they are overlooked."

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