Philip Hammond has said the government will prioritise a good deal for the City in its upcoming negotiations over leaving the EU.
In a visit to New York to reassure top Wall Street bankers, the chancellor said protecting access to Europe for financial services firms based in London was a pressing concern not only for UK businesses but also European ones that really on London’s status as global financial hub.
“We will place a very high priority on getting the right solution for financial services,” Hammond told Bloomberg in New York.
He added: “It is certainly one of the UK’s objectives to ensure that parts of financial services that are Europe-facing are able to continue doing work in Europe.
Read more: What you need to know about passporting
“There are many many substantial businesses across the EU in the real economy, car manufacturers, for example, who regularly use the City of London to access the deep and broad capital markets.
“They too should be advocates for maintaining Europe’s global financial hub.”
However, Hammond did not reveal what kind of form this “access” would take, saying he was looking at both passporting and equivalence rules - the two routes which allow EU and some non-EU firms to operate across the Single Market. Yesterday, the chief executive of the British Bankers' Association Anthony Browne warned equivalence rules, which some have advocated could protect London from being completely cut-off from the rest of the EU, were a poor alternative to the passporting rights currently used by firms based in London.
The chancellor also dismissed the idea Britain could fall back on its membership of the World Trade Organisation (WTO) as a route out of the EU. “Financial services is different from every other sector. They are not really covered effectively by WTO rules.”
Speaking just 24 hours after the fallout from the Conservative Party Conference seemed to signal the UK was on track for a “hard exit”, Hammond dismissed the idea of distinguishing between “hard” and “soft”. He did say, however, that he was preparing for a tough negotiation with the other EU members.
“The solution will have to involve give-and-take on both sides, but we don’t delude ourselves that our EU partners owe us any favours.”