The thousands of financial services firms in the UK employ over one million people, two thirds of whom work outside of London.
They contribute £71bn in tax revenues, which go to fund the good quality public resources we all rely on, and provide businesses up and down the country with essential services.
This is why, as newly appointed Treasury minister for financial services, I’m focused on ensuring the industry remains front and centre in the government’s thinking as we prepare to leave the EU.
Our natural advantages – a central time zone, the English language, coupled with the outstanding expertise and financial infrastructure we have at our disposal – mean Britain’s financial services sector can continue to go from strength to strength in the years ahead.
Since taking up my post last month, I have been engaging extensively with businesses, and am focused on ensuring that everyone preparing for the negotiations has the information they need to secure a long term deal for the financial services sector.
In the conversations I’ve had with industry, and with parliamentary colleagues and other government ministers, I’ve been heartened by how aligned everyone is.
No one here at home wants to undermine our world-leading financial services sector.
This is not just rhetoric: we are stepping up the pace in four key areas.
First, we need a bold and ambitious free trade agreement with our EU counterparts that covers both goods and services. The services point is crucial – not just for British finance, but for our national economy as a whole – with services making up 80 per cent of our economy and 74 per cent of the EU’s economy.
Second, we will negotiate a time-limited mutually beneficial implementation period. There is, for the most part, consensus that the question is not if there’s a transition: it’s what that transition will look like.
Moreover, the timing for when these arrangements are confirmed is key. It is reasonable that businesses on both sides of the channel want to know the score soon, whatever sector they operate in.
It’s important to understand this is an essential consideration for Europe and not simply the UK.
As a report from Boston Consulting highlighted earlier this month, EU27 businesses are underestimating the banking related costs if an implementation period is not put in place. The report identifies that approximately €1,280bn of bank assets (loans, securities and derivatives) may need to be rebooked from the UK to the EU27.
Third, on skills – where I know some firms are concerned that their ability to recruit the talent they need will be curtailed – I want to reiterate that Britain will remain open to global talent.
Our world-leading financial services across the UK have always been a magnet for talent from all corners of the globe. This must remain the case. We will continue to be open to the brightest and best, and do so in a way that minimises administrative burden and cost, including those travelling in and out of the UK on short business trips.
I’m also pleased to announce that I will be convening a roundtable discussion along with the Home Office for Financial Services leaders to come and discuss the issues specific to them. That way we’ll ensure that the UK’s future immigration system reflects the needs of one of our most important sectors.
Brexit means controlling migration better, not shutting it down.
Finally, I want to hear from the industry about how we avoid a fragmentation of financial services. As the chancellor said at Mansion House, this is a huge prize for the economies of Europe.
I recognise the genuine and reasonable concerns among our EU colleagues about the oversight of financial markets that provide a significant amount of economically important financial services to EU firms and citizens once we leave.
I believe these concerns can be addressed in negotiations by seeking a reciprocal free trade agreement that includes a shared commitment to prioritise financial stability via a process of continuing supervisory cooperation.
I’ve also met with the heads of the financial services regulators and Bank of England, and made clear the importance of continuing to strike the right balance between stability and competition. We must work together to minimise non-critical legislative changes, while using areas of discretion to boost links with new markets.
That’s why I’m stepping up our efforts to reach out to businesses across financial and professional services. Our financial services are central to our economy and future prosperity, and I am determined to ensure we are lock step on these crucial issues.