Loss of EU passporting 'significant risk' to UK business, says Tyrie

More than 5,000 British financial services firms rely on "passporting rights" to trade across the EU, the chairman of the Treasury select committee, Andrew Tyrie, has said.

Passporting rights allow firms to trade across the bloc without the need for separate licences.

Mr Tyrie said it showed the "significant" risk Britain leaving the single market would pose to business.

But Eurosceptics have previously said such an outcome would not harm the UK.

The data was provided in a letter to Mr Tyrie from Andrew Bailey, head of the Financial Conduct Authority (FCA).

In it, Mr Bailey revealed that 8,008 European companies use 23,532 passports to trade in the UK.

By contrast, 5,476 UK firms currently hold some 336,421 passports to trade elsewhere in EU.

Andrew Tyrie, head of the Treasury Committee, said the loss of passporting rights was a "significant" risk to business

'Significant risk'

Mr Tyrie, who published the figures on the Treasury Committee's website, said: "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.

"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."

It comes a day after the head of Germany's central bank, Jens Weidmann, said that passporting rights were "tied to the single market" and would automatically cease to apply if Great Britain left the EEA.

In a separate report, however, credit ratings agency Moody's said the loss of passporting rights would likely be "manageable" for most UK-based financial firms.

This is because the EU already recognises some non-EU regulatory regimes for the purpose of undertaking investment and banking business.

"This outcome would be credit negative, as it will have costs and is likely to reduce profitability at least in the short term," it said in a statement.

"But Moody's considers it unlikely that all permissions granted to financial firms will be lost."