UK experts reveal plan for future of financial services

Andy jalil –

With the financial services sector regarded as vital for the economy, the UK government is being urged to adopt a ‘bold and ambitious’ plan for a post-Brexit trade deal, as has been revealed by an elite taskforce of experts from the ‘City’ (financial district of London).
The detailed proposals will be published in Brussels, the HQ of the European Union, ahead of the group’s tour of the continent, during which it hopes to convince EU politicians of the benefits of maintaining strong ties with London’s financial sector.
The report, written by former City Minister Mark Hoban alongside law firm Hogan Lovells, calls for “continued high levels of convergence” between the UK and EU.
It has been backed by the chair of the powerful Treasury Select Committee.
Former cabinet minister, Nicky Morgan said: “The City and our financial institutions are major tax payers and employers.”
She added: “If the government is serious about London staying as Europe’s pre-eminent financial centre, they need to listen to these constructive suggestions and work with the authors of the report and EU counterparts to deliver this agreement.”
The Treasury said it would “digest the detail (of the plan) in the coming weeks.”
A spokesman added: “The UK is seeking an ambitious economic partnership with the EU and we need to think creatively about options.”
The report lays out an encouraging path to a Brexit wherein financial services firms can continue to trade freely and support the continent’s much-needed growth.
However, it also acts as a reminder of the complexities and political hurdles that stand in the way.
For example, some Brexit-backers will no doubt object to the regulatory proximity between the UK and Brussels that the report says is necessary to maintain free trade links.
It should, however, be borne in mind of all that a deal is vital for the economic health of both the UK and the rest of Europe.
Chancellor Philip Hammond has pledged to pursue a “bespoke” deal with the EU. “It is my priority as chancellor to ensure that the UK remains the financial services centre of the world.”
In UK’s fourth round of talks with Brussels, Brexit Minister Davis Davies had urged EU negotiator Michel Barnier to allow talks to progress onto “our new deep and special partnership.”
But Barnier maintained the EU’s line in these talks that negotiations on a trade deal cannot start until further agreement is reached on the UK’s financial settlement with Brussels, as well as issues such as citizens’ rights and the Irish border.
A report produced by the International Regulatory Strategy Group (IRSG), proposes “the best concepts from existing free trade agreements (FTAs) but goes far beyond them in scope and ambition.”
It calls for mutual recognition based on regulatory alignment and supervisory co-operation, a joint dispute resolution body, and a forum in which both sides can work together to implement new global standards.
If adopted, it will allow UK financial and professional services firms to operate inside the EU and vice versa without restriction.
Rachel Kent, partner at Hogan Lovells and chair of the IRSG workstream, said it would require a flexible approach with ongoing supervisory cooperation.
If either territory diverged too much from the other, market access would have to be withdrawn. She added: “Continued high levels of access is reliant on continued high levels of convergence, there is guarantee of access.”
Hoban has had meetings with the Treasury and the Department for Exiting the EU (DexEU), who are thought to be on board with the findings.
He acknowledged there were still those who believed the UK should be “punished”, but said increasingly the EU 27 (the remaining 27 countries in the EU) was realising that London’s loss would not be Frankfurt or Paris’ gain, but rather New York or Singapore’s.
However, London’s MEP (Member of European Parliament) Syed Kamall warned that the UK can expect to face more obstruction during Brexit talks.
He said: “While many of the suggestions appear to be a sensible way forward, you can expect EU negotiators to initially ask for more details and to keep talking for as long as possible in the belief that the continued uncertainty will encourage UK companies to put pressure on the UK government to pay whatever it takes to get a deal.”
(The author is our foreign correspondent based in the UK. He can be reached at