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What's the scenario with Brexit and financial services?

With a no-deal Brexit looking ever more likely, Paul Wallace explores what it could mean for the City.

One reason why City worries about Brexit diminished earlier this year was that there was less loose talk about no deal being better than a bad deal. But the EU’s rebuff of Theresa May’s proposals at the Salzburg summit on 20 September has revived fears that Britain may indeed leave the EU without a deal. Even if the prime minister can secure some form of agreement with the EU, she may not be able to get it through the Westminster parliament. A no-deal Brexit is looking ominously plausible.

The first batch of contingency plans, which set out how the government was preparing for such an exit from the EU and provided guidance for businesses, was supposed to offer reassurance when released on 23 August. If anything, they did the opposite. That is because many of the damaging consequences of a no-deal Brexit lie beyond the powers of British ministers. Protracted hold-ups outside Dover might emerge, for example, from French as well as British actions. On the same day, chancellor Philip Hammond said that in his view such an exit would pummel the economy and public finances in the longer term.