Chancellor Philip Hammond has won broad support for his speech today, pressing the case for why financial services must be included in any post-Brexit trade agreement - just hours after it was ruled out.
Speaking from Canary Wharf this afternoon, Hammond demanded a "unique" deal that gave the flexibility for both sides to deliver "fully equivalent regulatory outcomes" by agreeing to "bank our day one de facto equivalence", while accepting that the systems may evolve over time.
Echoing Prime Minister Theresa May's acknowledgement that Brexit would mean changes to the status quo, Hammond said: "We do not expect the same relationship we have today in all areas of activity in financial services. Trade offs should be expected... but we should be sure future relationship strengthens stability and prosperity, rather than weakens it."
His words were welcomed by key industry players.
City of London Corporation's policy chair Catherine McGuinness said: “Firms across the EU will welcome the ambitious yet achievable proposals set out in the speech made by the chancellor Philip Hammond today.
“The UK’s position is now much clearer," she added. "London’s global financial hub cannot be replicated anywhere else on the Continent. Refusing to include financial services as part of a final trade agreement would undoubtedly damage the whole European economy, limiting growth and risking jobs.
“We urge the EU to give their negotiating team flexibility by including financial services as part of a final trade agreement.”
Chief executive of UK Finance Stephen Jones agreed.
“The chancellor has today set out a credible approach that would preserve many of the benefits of free trade in financial services while giving both sides autonomy. A framework based on close supervisory cooperation and mutual recognition would be a win-win, benefitting the businesses and customers across the continent who rely on UK financial services.
“Firms now want to see swift agreement on the transition period, to provide much-needed certainty and allow us to focus on reaching a mutually beneficial trade deal.”
Josh Hardie, deputy director-general of the Confederation of British Industry, said: “The chancellor is absolutely right to be leading the fight for the UK’s financial services sector. Trying to forge a new trading relationship with our largest trading partner that does not include financial services is like building a ship with no sails.
“Challenging the assumption that financial services can’t be in a future trade agreement is right, as ambitious plans for an agreement are very much in the interests of both sides of the Channel. Hundreds of millions of people across Europe, from tourists to entrepreneurs to pensioners, rely on mutual market access in financial services every single day without even realising it."
Hardie added that once a transitional agreement was in place, firms would "have more reasons to pause contingency plans and to invest in UK".
Miles Celic, chief executive of TheCityUK said the chancellor's speech was "exactly what we wanted", saying Hammond had delivered a "statesman-like reflection of our economic priorities... rather than simply letting politics dictate the process and pace".
"His call was not just bold but pragmatic and realistic," he added, saying this and May's speech last week meant the UK had now "set out innovative, imaginative potential solutions"
The onus was now on the EU's side to move on from its "doctrinaire, unimaginative" approach which relies on "precedent".
"The reality is nothing like this has happened before," he added.
But it came just hours after European Council President Donald Tusk effectively ruled out any bespoke deal that might include financial services.
"Our agreement will not make trade between the UK and the EU frictionless or smoother," he said. "It will make it more complicated and costly than today, for all of us. This is the essence of Brexit."