UK Chancellor Rishi Sunak has stated that he desires improved access to EU markets for British financial services beyond what was outlined in the Brexit trade deal with the EU.
Both the Chancellor and Prime Minister Boris Johnson have acknowledged that the current terms of the trade deal fall short of their expectations when it comes to support for the UK service sector.
Services are crucial to the UK’s economic well-being, accounting for 80% of national economic output and 50% of the country’s exports. Of the service industry, the financial services sector is a particularly critical component, contributing over £130bn to the UK economy.
The significance of financial services is why Sunak declared in late December his intention to enable UK banks and other financial service providers to act as if they were still part of the EU in terms of trading.
“This deal also provides reassurance because there’s a stable regulatory cooperative framework mentioned in the deal,” Sunak informed reporters. “We will remain in close dialogue with our European partners when it comes to things like equivalence decisions.”
Sunak also stated that he plans to reach a memorandum of understanding between the EU and the UK in the next few months to help smooth out any issues.
However, with the trade deal now in effect, British-based financial services businesses will still be affected.
For example, British accountancy and auditing qualifications will no longer be recognised in the EU, resulting in a stark choice between requalifying and losing business.
The bottom line is that while the EU-UK trade deal does provide some much-needed continuity for Britain’s financial sector, it does not imply that the transition will be entirely seamless.
Furthermore, it will undoubtedly be several months, if not years, before British financial businesses can trade on the same terms they enjoyed under EU membership.