The International Regulatory Strategy Group has unveiled a blueprint for a post-Brexit free trade deal to support the financial services sector

Shangri-La Hotel Opens In The Shard
City firms are keen to retain access to European markets post-Brexit (Source: Getty)

The government is being urged to adopt a “bold and ambitious” plan for a post-Brexit trade deal, revealed this morning by an elite taskforce of City experts.

The detailed proposals will be published in Brussels ahead of the group’s whirlwind tour of the continent, during which it hopes to convince EU politicians of the benefits of maintaining strong ties with London’s financial sector.

Written by former City minister Mark Hoban alongside law firm Hogan Lovells, the report calls for “continued high levels of convergence” between the UK and EU.

It has been backed by the chair of the powerful Treasury Select Committee.

“The City and our financial institutions are major taxpayers and employers,” Nicky Morgan told City A.M.

“If the government is serious about London staying as Europe’s pre-eminent financial centre, they need to listen to these constructive suggestions and work with the authors of the report and EU counterparts to deliver this agreement”.

The Treasury said it will “digest the detail [of the plan] in the coming weeks”.

Read more: Q&A: What does the Brexit blueprint mean for the City?

A spokesperson added: “The UK is seeking an ambitious economic partnership with the EU... we need to think creatively about options.”

Chancellor Philip Hammond has pledged to pursue a “bespoke” deal with the EU.

“It is my priority as chancellor to ensure that the UK remains the financial services centre of the world,” he told an audience at Mansion House earlier this month.

The UK’s fourth round of talks with Brussels opened last night, with Brexit secretary David Davis urging EU negotiator Michel Barnier to allow talks to progress onto “our new deep and special partnership”. Barnier says negotiations on a trade deal cannot start until further agreement is reached on the UK’s financial settlement with Brussels, as well as issues such as citizens' rights and the Irish border.

Today’s report, produced by the International Regulatory Strategy Group (IRSG), proposes “the best concepts from existing free trade agreements (FTAs) but goes far beyond them in scope and ambition”.

It calls for mutual recognition based on regulatory alignment and supervisory co-operation, a joint dispute resolution body, and a forum in which both sides can work together to implement new global standards.

Read more: Moody's downgrades UK credit rating amid Brexit fears

If adopted, it will allow UK financial and professional services firms to operate inside the EU and vice versa without restriction.

Rachel Kent, partner at Hogan Lovells and chair of the IRSG workstream, said it would require a flexible approach with ongoing supervisory cooperation. If either territory diverged too much from the other, market access would have to be withdrawn, she added.

“Continued high levels of access is reliant on continued high levels of convergence,” Hoban agreed.

“There is no guarantee of access.”

Hoban has had meetings with the Treasury and Department for Exiting the EU (DexEU), who are thought to be on board with the findings.

He acknowledged there were still those who believe the UK should be “punished”, but said increasingly the EU27 was realising that London’s loss would not be Frankfurt or Paris’ gain, but rather New York and Singapore’s.

However, London MEP Syed Kamall warned that the UK can expect to face more obstruction during Brexit talks.

“While many of the suggestions appear to be a sensible way forward, you can expect EU negotiators to initially ask for more details and to keep talking for as long as possible in the belief that the continued uncertainty will encourage UK companies to put pressure on the UK government to pay whatever it takes to get a deal,” Kamall said.

Read more: Theresa May proposes a transition period during Brexit speech in Florence

Related articles