The plight of the city of London has been revealed as the Brexit transaction hopes to disappear

Just over a week ago, the city of London reached a tougher realization on its post-Brexit future: a financial services agreement with the European Union may be too little, too late to protect its dominant position.

Negotiations are set to begin soon to outline regulatory cooperation between the UK and the EU, after the industry was largely excluded from the trade deal that marked Britain’s split from the EU on 31 December. A deadline has been set for March. and so far details – including who will lead the talks – are scarce.

The first days of Brexit revealed the stakes: London lost 6.3 billion euros ($ 7.7 billion) in daily stock transactions to EU headquarters on January 4, the first working day after the transition period. The overnight loss added impetus to calls from financial firms and the London Stock Exchange to policy makers to ease the rules and help the city gain a competitive advantage over European rivals.

Such a move came over the weekend, with the UK Treasury declaring its intention to do so to allow the trading of Swiss shares, reversing the EU ban on the activity. London’s ability to offer transactions in companies such as Nestle SA and Roche Holding AG will help offset losses from EU shares. But the position also deepens Britain’s division with the EU, making the bloc less likely to provide market access.

Those discussions – centered around a principle called “equivalence” – are open, without the deadline governing the trade agreement. Little progress has been made in most areas.

European officials have little incentive to reach an agreement, while financial centers in Paris and Amsterdam gain business at the expense of London. The Governor of the Bank of England, Andrew Bailey, issued a discouraging note last week, saying that block access should not depend on Brussels’ standards.

Although dramatic, the loss of EU shares is unlikely to have a noticeable impact on the tax generated by the UK business, which was over £ 3 billion last year. But there was an immediate warning about the potential costs of Brexit. Overall, Square Mile accounted for approximately £ 75 billion in taxes in 2019, including labor taxes, according to the City of London Corporation.

“EU stock trading is gone, it will not return,” said David Howson, president of Cboe Europe, the largest venue for EU action in London. The company saw nearly 95 percent of that business move, Howson told Bloomberg Television on Thursday.

How it holds the key “equivalence” for post-Brexit banking: QuickTake

Bankers and asset managers said the week was largely untouched. This was due to years of training of companies, some of which involved moving businesses – although less than initially feared – from the UK

Companies like JPMorgan Chase & Co. and Goldman Sachs Group Inc. they have already moved tens of jobs and hundreds of billions of dollars into assets, while asset managers, including Janus Henderson Group Plc and Standard Life Aberdeen Plc, use funds in Luxembourg and Ireland for clients within the block.

However, this allows companies to face endlessly the complexity and added cost of support operations in both London and the EU. Others, such as Hargreaves Lansdown Plc, have decided to stop marketing to European customers.