UK signs 'long awaited' financial services agreement with EU

Wed 28 Jun 2023
Posted by: Phillip Adnett
Trade News

City of London skyline including the Shard

The UK government yesterday (27 June) signed an agreement with the EU outlining areas of co-operation on financial services, with senior EU politicians saying that relations had “turned a page”.

According to a government press release, chancellor Jeremy Hunt was in Brussels to sign the Memorandum of Understanding (MoU) alongside EU financial services commissioner Mairead McGuinness. This was the first visit by a UK chancellor to Brussels for over three years.

The MoU aims to create a forum for the UK and EU to discuss voluntary regulatory co-operation on financial services, with the first meeting of the forum expected in the autumn.

The FT notes that the EU has a similar agreement with the US.

Joint co-operation

Under the memorandum, both sides will share information, work together on any joint problems and coordinate where appropriate on issues ahead of international meetings such as the G7 or G20.

Hunt said:

“The UK and EU’s financial markets are deeply interconnected and building a constructive, voluntary relationship is of mutual benefit to us both.

“In the UK, our financial services sector is a true British success story. Together with the related professional services sector it was worth £275bn last year, making up an estimated 12 per cent of the British economy.”

Henriette Gjaerde, trade and customs specialist and IOE&IT trade agreements lead, said:

“The memorandum is a significant move towards rebuilding post-Brexit financial relations between UK and the EU, highlighting the important interconnectivity of their financial markets and shared advantages of a constructive relationship.”

Wider progress

An agreement on financial services had been on hold for two years due to wider tensions over the UK-EU trading relationship, according to Bloomberg.

McGuinness said that it was “fair to say we’ve turned a page in our relationship”, thanking European Commission (EC) president Ursula von der Leyen, EC vice president Maroš Šefčovič and UK prime minister Rishi Sunak.

She also said that the two sides shared a commitment to financial stability, protecting consumers and investors, and also facing challenges “like fighting financial crime, supporting sustainable finance, and enabling digital finance.”