Sunday 14 February 2021 11:22 am

City of London's biggest competition post-Brexit will not be EU, says Raab

The UK’s financial services industry will face its biggest post-Brexit competition from Asia and the US, according to foreign secretary Dominic Raab.

Raab said EU financial capitals may “nick a bit of business here and there from the City”, but that they will not challenge London’s status as Europe’s global financial capital.

Read more: Brexit crowns Amsterdam Europe’s top trading hub, ousting The City

It comes as Amsterdam surpassed London as the largest share trading centre in January in the wake of the UK’s exit from the EU’s single market and customs union.

The City also lost its previous EU-wide access to European financial markets on 31 December.

“I don’t accept the binary zero sum war of attrition…what matters to the UK and the City is the comparative advantage we have on the fundamentals,” Raab told the BBC.

Read more: What are the UK-EU memorandum of understanding talks on financial services about?

“You were citing equities, but the boss of Barclays has been saying recently how the long-term position of the UK is unparalleled, unrivalled. The crucial question for the EU, while it may be able if you like to nick a bit of business here or there from the City, but the problem is the measures they will take to achieve this will undermine their own competitiveness.

“The challenge to London as a global financial centre around the world will come from Tokyo, New York and other areas rather than those European hubs. Particularly if they start to erect barriers to trade and investment.”

The only way the City of London can regain its pre-Brexit access to the EU is if Brussels grants regulatory equivalence across 40 areas, however Brussels believes the UK is destined to diverge from its financial services regulations and has withheld the designation.

The Treasury is currently holding Memorandum of Understanding talks with the EU to ensure future regulatory cooperation around financial services.

The talks aim to put in place an agreement so that financial services regulators in the UK and EU share information and have open dialogue when making new regulatory decisions.

Barclays chief executive Jes Staley said earlier this week that the City needs “to be focused on New York and Singapore” post-Brexit and not the EU.

Read more: UK unveils new £20m fund for British businesses facing Brexit disruption

“I think Brexit is more than likely on the positive side than on the negative side,” he told the BBC.

“What the UK needs and London needs, is to make sure that the City is one of the best places, whether [it is in terms of] regulation or law or language, or talent.

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