The UK finance industry can benefit from new global opportunities allowing it to remain a world leading financial centre after Brexit, top industry officials said on January 31.
After the vote to leave the EU, banks warned that London’s future as a top global financial centre was in doubt without continued full “passporting” rights to the bloc’s single market.
Passporting is the ability under EU rules for any financial firm to serve the whole region from a single base, cutting costs and red tape.
But this month Prime Minister Theresa May said the UK would not be part of the single market after Brexit, meaning continued full passporting rights were not possible.
Top officials reflected this new reality on Tuesday in a hearing in parliament.
Anthony Browne, Chief Executive of the British Bankers’ Association, Chris Cummings, Chief Executive of the Investment Association, and Gary Campkin, director of policy at TheCityUK told lawmakers they wanted a “mutual market access” trading deal with the EU in future.
“There are huge opportunities here absolutely,” Browne told the International Trade Committee.
This would stop short of passporting, but still allow financial firms in the UK and EU based customers to do business with each other.
The CityUK was also upbeat on the “once-in-a-generation opportunity” to reframe Britain’s trade policy and not just focusing solely on negotiating new trading terms with the EU.
“It’s important that we look creatively at new deals and new arrangements. I don’t think it’s a question of saying which is more important, it’s a question of looking at it in the round,” Campkin said.
Browne said there will be new opportunities to strike new free trade deals and negotiate new market access for financial service companies.
He said the most lucrative opportunities may be in more advanced nations rather than faster growing emerging markets that tend to have restricted economies.
“You may find some of the more established markets are lower hanging fruit in terms of removing obstacles to trade,” he said.
When asked by a lawmaker if he was now bullish on Brexit, he replied the exit from the trading bloc presented challenges and reasons for optimism.
“It does present opportunities and one thing I have learnt in life, particularly in this job, is we should embrace the inevitable,” Browne said.
Browne said it was important that the government prioritises negotiating market access first and then decides what EU laws it can dispense with.
Banks may be able to secure market access by so-called equivalence, whereby banks in Britain would have access if they abide by rules similar to those in force in the bloc.
“What I don’t think would be in our national interest is to tear up some bit of local regulation we don’t live and say ha we have done this and then find no one wants to trade with us,” Browne said.