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Chancellor Rishi Sunak on Monday told MPs Brexit will help “reinforce the UK’s position as a globally pre-eminent financial centre”, in spite of a looming regulatory stand-off with Brussels. Government officials admit they do not expect the EU to make life easy for the City in the coming months, and debate is accelerating in the industry and among policymakers on how to reshape Europe’s biggest financial hub.
The EU has refused to grant “equivalence” rulings to most sectors of Britain’s financial services industry — a designation that recognises the quality of UK regulations and aids cross-border sales. Although the EU and UK agreed in the Brexit trade deal to draw up a memorandum of understanding by March on regulatory co-operation, that does not guarantee Brussels will issue equivalence rulings.
One ally of Boris Johnson, the UK’s prime minister, said the EU had been “playing games” on the issue in an attempt to lure more jobs from the City of London to financial centres on the continent including Paris and Amsterdam. On the question of when Brussels might certify British regulations as equivalent to its own, the ally said: “It would be wrong to assume that it’s guaranteed or that it will happen on a prescribed timetable”.
Mr Sunak told MPs in the House of Commons that the conclusion of the Brexit process would now allow Britain to “start doing things differently and better” in terms of regulation. Recommended Patrick Jenkins Brexit can mean London loses even if the EU doesn’t gain But Mr Johnson has admitted his EU trade deal did “not go as far as we would like” on financial services — which generally were largely ignored — and his allies admit things are not likely to improve in the near future.
Although many in the City regard Mr Johnson’s deal as effectively a “no deal Brexit” for the financial services sector, Mr Sunak has claimed that new regulatory autonomy in London could give the sector a boost. Referring to Brexiters who claimed that the City could now enjoy another 1980s style leap forward, Mr Sunak told City AM that they “make a really, really good point”. Referring to the Thatcher-era deregulation reforms that opened up the City to more competition and foreign investment, Mr Sunak added that people were free to “call it Big Bang 2.0 or whatever”.....