Leaving the EU will “reinforce the UK’s position as a globally pre-eminent financial centre”, the chancellor Rishi Sunak told MPs yesterday (11 January).
He believes that nimbler regulation for the City of London could allow it to develop as a centre for emerging industries, whether with green finance or new listing rules to support new technology.
Having completed its split from the EU at the end of the transition period on 31 December, Sunak believes the UK now has the opportunity “to start doing things differently and better”, the FT reports.
No-deal for finance
Earlier this week, finance workers called the free trade agreement signed by the UK and EU at the end of last year an effective ‘no-deal’ outcome for the sector.
The EU continues to drag its heels over recognising UK regulation in financial services as equally robust to its own and has therefore not yet granted the ‘equivalence’ status needed to give UK firms continued access to European financial markets.
This curtails the ability of UK-based financial companies to operate in the EU and has led to some activities and funds being relocated away from the City of London.
Rollovers ending
The UK and EU will need to agree to 59 new and separate agreements to perfectly replicate previous trading arrangements in the sector, law firm Clifford Chance told City AM.
London and Brussels have pledged to agree a memorandum of understanding by March on regulatory co-operation and equivalence, but full recognition of UK equivalence could take much longer.
Back to the City
The chancellor hopes that the return of workers to offices after the conclusion of Covid-19 restrictions later this year will lead to a new ‘big bang’ for UK financial services, according to the Times.
However, he warned that in the short term Britain’s economy “will get worse before it gets better”.
“Many people are losing their jobs, businesses are struggling, our public finances have been badly damaged and will need repair,” he told the Commons. “The road ahead will be tough.”