Chancellor to sign financial services memorandum with Brussels

Chancellor Jeremy Hunt is to sign an agreement with the EU that will see London and Brussels working closer together on financial services and co-ordinating ahead of big international meetings.

Mr Hunt said that the memorandum of understanding would help to support the UK and London’s role as a hub of financial services around the world.

The sector makes up more than a tenth of the British economy, being worth more than a quarter of a trillion pounds last year.

However, EU officials said the deal only sets up a space where the two sides can speak to each other.

“It will set up a forum to facilitate dialogue,” Daniel Ferrie, a spokesperson for the European Commission, tweeted on Tuesday.

“It does not restore UK access to EU, nor prejudges adoption of equivalence decisions.”

The Treasury said that the Memorandum, due to be signed at around 2.30pm Brussels time (1.30pm BST), will create an “ongoing forum for the UK and the EU to discuss voluntary regulatory cooperation on financial services issues”.

It will allow the parties to “coordinate positions where appropriate on issues ahead of G7, G20 and other international meetings”.

Mr Hunt said: “The UK and EU’s financial markets are deeply interconnected and building a constructive, voluntary relationship is of mutual benefit to us both.

“In the UK, our financial services sector is a true British success story. Together with the related professional services sector it was worth £275 billion last year, making up an estimated 12% of the British economy.

“This agreement with our European partners as sovereign equals builds on our arrangements with the US, Japan and Singapore, helping to support the sector’s role as a global financial services hub.”

Around £11 trillion of assets were managed in the UK in 2020, just under half of which (44%) was on behalf of international investors, including those from the EU.

It is the first time in more than three years that a British Chancellor has visited Brussels.

Mr Hunt will meet Commissioner Mairead McGuinness, who will sign the deal, as well as other European commissioners.

Chris Cummings, chief executive of the Investment Association, said: “The signing of the MoU on financial services is an important milestone.

“A close partnership between the UK and EU, which recognises the long-shared history of cooperation, is of mutual benefit and will mean a more resilient and dynamic investment management sector across Europe that benefits citizens and businesses wherever they may be located.

“Now the MoU has been confirmed, all focus must now turn to ensuring the Joint Forum on Regulatory Cooperation delivers a pragmatic, forward-looking dialogue focused on finding common solutions to common challenges.

“This includes encouraging greater retail participation in European markets, promoting international coherence in sustainability-related disclosures, and identifying how the utilisation of new technology can drive innovation across the sector.

“We look forward to working with HM Treasury and the European Commission in delivering against this goal.”