Britain’s financial sector needs stability to secure its future, along with deeper access to the European Union market after Brexit than what non-EU countries normally get, a senior industry official said on Wednesday.
Britain is due to leave the bloc on March 29 but has yet to agree the terms of its divorce after parliament two weeks ago rejected the deal negotiated by Prime Minister Theresa May with the EU. On Tuesday parliament told May to renegotiate aspects of her deal, though the EU has ruled out any changes.
“We want markets to continue to operate smoothly, without disruption,” said Paul Manduca, chairman of TheCityUK’s advisory council told the promotional body’s annual dinner.
“As we get closer to March 29 the need for clarity is becoming ever more urgent.”
Manduca, who also chairs insurer Prudential, said the financial sector wants market access for both Britain and the EU that has more “depth and certainty” than the bloc’s existing “equivalence” trading regime.
The EU is Britain’s biggest financial services customer.
“Any new arrangements should be as robust as the EU regime that we have helped build as members. But we must also have the flexibility to ensure our regulatory system reflects the unique aspects of the UK economy and the global opportunities ahead,” Manduca said. TheCityUK had proposed “mutual recognition”, a broad form of EU market access based on each side accepting each other’s rules.
Brussels rejected this proposal and instead offered equivalence, a patchier, less predictable system of market access whereby the EU alone decides if a foreign financial firm can serve customers on its turf in limited areas of finance.
Many banks, insurers and fund managers in London have instead opted to open hubs in the EU by March to avoid potential loss of access to continental clients.
Manduca said that creating a stable and welcoming business environment and a globally competitive tax system will provide firms with the confidence they need to invest in Britain.
“We know markets take a long time to move elsewhere, but alongside the risks associated with Brexit, the large financial centers in Asia are rapidly emerging as genuine contenders to compete with us and New York,” Manduca told the event, which was attended by British finance minister Philip Hammond.