On April 5, the European Parliament (Parliament) announced that it has voted to adopt a resolution (Resolution) on negotiations with the United Kingdom, following its notification that it intends to withdraw from the European Union.

The Resolution sets out Parliament’s key principles and conditions for its approval of the United Kingdom’s withdrawal agreement. Any such agreement at the end of UK-EU negotiations will require the approval of the Parliament.

In the Resolution, as well as stating the importance of the protecting the rights of citizens during the negotiations, the need for negotiations to be made in good faith and that the United Kingdom negotiating trade agreements with third countries prior to its formal exit from the European Union would breach the EU Treaty, the Parliament makes several points relating to financial services, among other things. The Parliament:

• warns that any bilateral arrangement in the areas of EU competence between one or several remaining member states and the United Kingdom, which has not been agreed by the EU member states acting together, relating to issues included in the scope of the withdrawal agreement or impinging on the future relationship of the European Union with the United Kingdom, would be in contradiction with the Treaties. This would especially be the case for any bilateral agreement or regulatory or supervisory practice that would relate to any privileged access to the internal market for UK-based financial institutions;
• opposes any future agreement that contains piecemeal or sectoral provisions, including with respect to financial services, providing UK-based institutions with preferential access to the internal market or the customs union;
• underlines that, after its withdrawal, the United Kingdom will fall under the third-country regime provided for in EU legislation; and
• calls for an agreement to be reached as quickly as possible on the relocation of the European Banking Authority (currently located in London) and for the process of relocation to begin as soon as practicable.

More generally, the Parliament states that, should substantial progress be made towards a withdrawal agreement, talks could start on possible transitional arrangements for the UK’s future relationship with the European Union. However, such arrangements must not last longer than three years, and an agreement on a future relationship between the European Union and the United Kingdom as a third country can only be concluded once the United Kingdom has withdrawn from the European Union.

Upon being formalized, the resolution will be submitted to the European Council, the Council of the European Union, the European Commission, the European Central Bank, EU national parliaments and the UK government.

A provisional copy of the Resolution is available here.