Banks and insurers lined up to back the British government’s demand that a future trade deal with the European Union must include financial services, putting them on a collision course with Brussels.
Faced with the world’s biggest financial centre being cut off from a core market after Brexit, British finance minister Philip Hammond said on Wednesday that finance should be at the heart of a new trade deal with Europe.
He sketched out how Britain and the EU could keep their financial markets integrated and avoid costly fragmentation, based on a blueprint from the City of London financial district and TheCityUK lobby.
But just before Hammond spoke, Brussels offered a free trade agreement that falls well short of Hammond’s plans, saying Britain’s banks and insurers would get the same treatment as rivals from other non-EU countries and only get limited access.
Catherine McGuinness, policy chair for the City of London, home to Britain’s financial district said the EU’s position would hit the wider European economy.
“Refusing to include financial services as part of a final trade agreement would undoubtedly damage the whole European economy, limiting growth and risking jobs,” she said.
“We urge the EU to give their negotiating team flexibility by including financial services as part of a final trade agreement.”
The Association of British Insurers said it would defy common sense not to include financial services in a trade deal.
“It’s now time for everyone to drop the dogma and get round the table,” ABI Director General Huw Evans said.
The Investment Association said protecting the ability of asset managers in Britain to serve EU-based clients was critical to avoid disruption to Europe’s economy and to protect the integrity of the wider financial services industry in the UK.