Brexit FURY: Rishi Sunak rages at EU – financial services equivalence ‘has not happened’
Brexit: David Frost on chances of financial services agreement
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Financial services were largely overlooked in nearly a year of Brexit trade deal negotiations between the two sides, which culminated in a last-minute agreement on December 24. Since then, a huge row has broken out between Britain and the European Union, with the City of London seeking an “equivalence” arrangement with the bloc. But in the Chancellor’s traditional Mansion House speech to the City, Rishi Sunak said: “As I said in parliament in November, our ambition has been to reach a comprehensive set of mutual decisions on financial services equivalence. That has not happened.
“Now, we are moving forward, continuing to cooperate on questions of global finance, each as a sovereign jurisdiction with our own priorities.
“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 acknowledged the vital importance of the financial services sector, which he said contributes £76bn in taxes each year while also employing 2.3 million people.
But Brexit has placed a huge strain on the sector, with a significant power grab from the EU now firmly underway.
Around 7,500 financial jobs have been shifted to hubs throughout the continent, which has seen British firms lose “passporting” rights that had enabled them to trade more freely with European countries.
There have been intense efforts to secure “equivalence” status, where the UK and EU would both recognise that the other abides by similar standards.
But Britain has become increasingly frustrated at the refusal from Brussels to grant firms access to the bloc that would mirror moves towards the likes of the US, Canada, Australia, Hong Kong and Brazil.
But during his speech at Mansion House, Mr Sunak set out his vision for financial services, insisting Brexit can be used as an opportunity to tailor rules while keeping to high regulatory standards and open markets.
The Chancellor outlined how he wants to “sharpen” the sector’s competitive advantage.
He said rules on prospectuses, which give investors information about companies that want to list, will be reviewed so “more companies can and do list on UK markets”.
Mr Sunak added a review of the capital markets will initially look at immediate changes” to remove the “most ineffective and distortionary regulatory requirements” the UK inherited from the EU.
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This refers to rules requiring banks to trade on a specific platform, and restricts the amount of share trading taking place off an exchange in the “dark”.
The Treasury will also outline a plan over how it wants to rules around insurance capital changed following a consultation.
A public consultation will take place looking at safeguards on access to money after the coronavirus pandemic saw a huge shift towards cashless payments and forced a number of bank branches to close.
Mr Sunak said: “Financial services don’t just generate prosperity at home. They give us the economic power to project our values on the global stage.
“More open, more competitive, more technologically advanced, and more sustainable – that is our vision for financial services.
“The roadmap we are publishing today sets out a detailed plan for the next few years – and I look forward to delivering it, together.”
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