Brexit: Barnier says things will be ‘more difficult’ for UK
Following Britain’s departure from the bloc’s single market, the City of London’s access to the EU has been severed. Brussels has since stalled on deciding whether UK financial rules are “equivalent” to regulation in the bloc – a key condition for granting market access.
The EU said it was concerned Britain will water down financial services rules in future.
It will only resume its equivalence assessments once its member states formally back a new regulatory cooperation framework with Britain.
During a news conference, Andrew Bailey, the Governor of the Bank of England, said nothing has really “moved forwards”.
He said: “On equivalence, I think it’s fair to say that nothing really has moved forwards.”
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City of London skyline
Yesterday, Mr Bailey said he had no intention of loosening financial rules as Britain sought to attract foreign business after Brexit.
In a letter to Chancellor Rishi Sunak, Mr Bailey said: “The UK’s reputation for strong standards, independent regulation and financial stability has been and will remain a crucial component of its attractiveness to internationally active financial institutions.”
Britain has criticised the EU for demands that it says amount in practice to line-by-line alignment of rules, to which Brussels has continued to deny.
Bank of England deputy governor Jon Cunliffe added: “We are committed to outcomes-based equivalence.
Bank of England Governor Andrew Bailey
“Those are the arrangements that we have with many countries.
“But both sides need to want that.”
Mr Bailey’s comments come after Mr Sunak said this month that equivalence “has not happened” and it is time to focus on improving London’s global competitiveness.
Mr Sunak said: “Now, we are moving forward, continuing to cooperate on questions of global finance, but each as a sovereign jurisdiction with our own priorities.
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“We now have the freedom to do things differently and better, and we intend to use it fully.”
Mr Sunak previously said Britain needed a plan for the industry “which sharpens our competitive advantage while acting in the interests of our citizens and communities”.
This week, it was revealed US businesses with operations in the UK are expected to increase their investment in the next few years.
This comes as Brussels’ plan to seize power flops following Britain’s departure from the EU.
Prime Minister Boris Johnson
Duncan Edwards, chief executive of BritishAmerican Business, said the UK is “very well-positioned” to attract companies from the US.
He told the Financial Times: “The UK is very well-positioned to continue to attract companies from the US and from around the globe.
“But this positive outlook will be enhanced by a comprehensive trade deal with the US, a more positive political and trading relationship with the EU, and more business-friendly domestic policies.”
This financial boost comes just months after several banks – including Morgan Stanley, Barclays and Goldman Sachs, moved senior bankers out of London.
Chancellor Rishi Sunak
These firms looked to centres in Frankfurt, Paris and Milan due to the lack of provisions in the Trade and Cooperation Agreement.
Many companies called on Prime Minister Boris Johnson to agree a financial services deal with the EU although Brussels has stalled on doing so in order to pressure the UK over elements of the agreement.
The UK and EU agreed on a memorandum of understanding in March to continue the cooperation between financial regulators but Brussels did not grant equivalence.