Chancellor Rishi Sunak has said that the UK can no longer wait for a financial services deal with the EU and should now seek to make the most of its ability to make its own rules.
Speaking to bankers at the Mansion House this morning (1 July), Sunak said the “ambition” to gain an equivalence agreement granting the sector continued access to the EU market “has not happened”.
A decision from Brussels in favour of ‘equivalence’ would have seen the EU judge the UK’s financial regulations to be equally robust to its own.
Freedom to be different
Sunak told the audience: “We now have the freedom to do things differently and better, and we intend to use it fully. But I can equally reassure you, the EU will never have cause to deny the UK access because of poor regulatory standards”.
The chancellor was using the speech to lay out his post-Brexit vision to make the UK the most “advanced and exciting” financial services hub in the world.
The government today published a detailed plan for how the City of London’s competitive advantage in financial services will be maintained and increased for “decades to come”.
Loss of access
However, ITV business and economics editor Joel Hills tweeted that the decision to not pursue an equivalence deal made it easier for Australia and Argentina to sell financial services into the EU than the UK.
As reported in the IOE&IT Daily Update, financial services were not covered in last year’s UK-EU trade deal, resulting in reduced UK access to European markets.
In a boost for the City, Sunak has secured US backing to exempt City of London finance firms from new rules intended to force multinationals into paying more tax, according to the Telegraph.
However, the price for its support could be that the UK drops its digital services tax which would impact US tech giants such as Facebook, Apple and Amazon.
The UK and US joined other G7 nations in pledging to introduce a new minimum corporation tax last month.
In his speech the Chancellor also announced that the UK will introduce new sustainability disclosure requirements, meaning firms will have to report on the impact they are having on the environment.
A new Green Bond is also being launched to fund jobs contributing to the UK’s pledges to tackle climate change and improve the country’s biodiversity.