With one year to go before the UK’s departure from the European Union, an acceptable deal on financial services between the UK and the EU looks likely.
This is undoubtedly good news. But to make the most of Brexit, it is vital to consider how the City’s perspective has evolved, and what needs to be done to ensure that the global financial services industry will remain in the UK come what may.
The City has moved its post-Brexit position massively since the Referendum.
In 2016, the City of London Corporation’s policy chairman, Mark Boleat, said that passporting is an absolutely necessity for investment banking.
Six months later, the City’s main lobby group, made up of the world’s largest financial service companies including five EU27 headquartered banks, moved away from wanting EU financial passports to advocating for mutual recognition instead.
Now the consensus opinion, from both multinationals and SMEs, is that the City must not become a rule-taker after the UK leaves the EU.
For now, London’s position is stable, but not invincible. London has again topped the Z/Yen Global Financial Centre Index, which ranks the competitiveness of financial centres, but the gap between the City and its non-EU rivals is closing.
To ensure that London remains competitive internationally, the UK regulatory authorities and Treasury must take the opportunity of Brexit to match regulations and taxes in line with Britain’s major competitors, rather than with the EU.