Monday 16 November 2020 4:30 pm

Exclusive: Ministers risk 'catastrophic' outcome for financial services in Brexit talks, warns mayor

Sadiq Khan has today warned that the Government risks a “diminished country” if it fails to protect the financial services industry in Brexit negotiations. 

Writing exclusively for City A.M., the Mayor of London says that the capital’s world-leading financial sector could become a “major casualty” of the UK’s exit from the European Union.

Khan calls upon Brexit negotiators to “shield, not sacrifice” financial services and London more generally if the whole country is to recover from the economic ravages of the Covid-19 pandemic. 

Read more: Brexit breakthrough needed this week, say trade experts

And in what appears to be a coded criticism of the focus on fisheries in negotiations, the Mayor further slams the Government for putting so-called red lines around “symbolic, but relatively niche” industries rather than those strategically important to the economy.

“Come the end of the year, the City and the whole UK financial services sector will face significant barriers to doing business directly with a market to which it currently exports around £26 billion of financial services every year,” the Mayor writes. 

“This would be a catastrophic outcome, but one that’s looking increasingly likely,” he continues, referring to the lack of progress towards a trade deal.

In a marked contrast from many in his Labour party, the Mayor says “the reality is our financial sector is key to serving the real economy, and a diminished financial services sector would only lead to a diminished country.” 

Read more: City of London to be shut out of EU with no equivalence deal from January

A Government official told City A.M.: ““From the start of negotiations with the EU, we have held discussions across a range of important chapters – ensuring that a deal delivers for businesses and citizens across the whole of the UK.

“This includes our ambition to provide a predictable, transparent and business-friendly environment for financial services – securing the UK’s position as a world-leader in this sector.

“We’ve been clear that any agreement must fully respect UK sovereignty – taking back control of our laws, trade and waters.”

Read more: Goldman Sachs joins other City firms in moving assets out of UK ahead of Brexit