Chancellor Rishi Sunak will use tomorrow’s spring Budget announcement to launch the UK’s fightback bid to retain and gain business in the financial services sector.
The industry has been grappling with the lack of a comprehensive trade agreement on services with the EU, which has led to speculation that the City of London could loses its status as Europe’s prime location for finance trade.
Ongoing talks
The UK’s trade deal with the EU provided little support for services companies, with some the sector calling it effectively a ‘no deal’.
London and Brussels are involved in ongoing talks to agree on whether UK financial regulations are equally robust to the EU’s for ‘equivalence’ status to be granted to the UK. This status would permit continued market access for UK firms in Europe.
However, Bank of England governor Andrew Bailey has warned that the EU’s current regulatory demands are “unrealistic” for the UK and that it should not become a “rule taker” from the EU.
Show ambition
Labour has called on the government to show more ambition in its talks with Brussels over equivalence, City AM reports.
Shadow chancellor, Anneliese Dodds said the UK was “bumping along the bottom” in its Memorandum of Understanding talks with the EU on financial services.
Although these talks are not expected to deliver greater EU access for City firms, Dodds said that should be the aim.
“The government seems to be trying to manage expectations down from where we should be as a country,” she said. “I think we’ve got to be ambitious here and break beyond that zero-sum mentality and emphasise having trade in the financial and related services industry.”
Review to boost trade
Alongside the Budget, the chancellor will publish a review by former EU financial services commissioner Lord Jonathan Hill which is expected to propose changes to make Britain a more attractive place for entrepreneurs.
Both Sunak and Boris Johnson see Brexit as an opportunity for the UK to create a more nimble and agile regulatory environment for innovative companies of all kinds, including financial services.
