Now that we have left the EU, we begin a new chapter in our history.
Strengthened by a decade of economic recovery, we will step forward with confidence into an era of unity and renewal. We will level up, decarbonise our economy, and back business.
Our world-leading financial services sector will play a crucial role in this. From leading centres like London and Edinburgh to regional hubs in Leeds and Birmingham, financial services are integral to our country.
The sector helps drive our economy, employing more than one million people across the UK — two thirds of whom are outside of London — contributing £127bn to our economy every year, and bringing in over £75bn in taxes that help fund our vital public services.
As we level up the whole country, our financial services sector will help create jobs, innovate, and boost investment around the UK. It’s also a great British export, and I am determined to keep it that way now and in the decades to come.
From next year, we will have the freedom to make our own rules outside the constraints of the Single Market and customs union. And as the Prime Minister has set out, we want a future relationship with the EU where we work together in pursuit of common interests.
What does this mean for the financial sector?
First, we will pursue fulfilling the joint commitment that the UK and EU have already made to conclude a full range of equivalence assessments by June 2020.
As we leave the EU with the same rules, achieving equivalence on day one should not be complicated. Of course, each side will only grant equivalence if it believes the other’s regulations are compatible. But compatible does not mean identical, and both the UK and the EU have at different times recognised the importance of focusing on regulatory outcomes.
We will no longer be rule-takers, but we remain committed to the highest international standards of financial regulation and to shaping global rule-making. We may choose to do things in the same way as the EU if it works for the UK. But there will be differences, not least because as a global financial centre the UK needs to keep pace with and drive international standards.
Our starting point will be what’s right for the UK, to protect our economy and to ensure financial stability, which is why we have already announced that we will implement the Basel 3 and 3.1 standards in the upcoming Financial Services Bill.
Second, we hope to agree a chapter on financial services in the UK-EU free trade agreement that establishes a baseline for the trading relationship. This should establish regulatory cooperation arrangements with the EU that facilitate dialogue and reflect the degree of access between both markets.
If the EU, like us, wants a durable relationship, we should also include measures to directly address the long-term needs of industry for a reliable equivalence process. This would provide the certainty on which internationally mobile businesses can depend.
Together these arrangements — findings of equivalence now, and measures to sustain trust and cooperation so they can endure into the future — offer the best solution to the question of agreeing our relationship with the EU this year.
This is important not only in the short term, but to establish the norms and ways of working with the EU that will endure for the decades to come.
We also face bigger, longer-term questions, above all about the markets of the future — driven by green finance and the technological revolution — that will transform financial services in the years ahead. In addressing these challenges, the UK is absolutely clear about our values as a leading global financial centre: a safe and transparent place to do business, with world leading regulators, and the markets that give access to the whole world.
That’s why the Treasury will come forward with a white paper in the spring on the future of the UK financial sector. This is a future where we will be at the forefront of technological innovation and efforts to tackle climate change, with a strong, resilient, and competitive financial sector, underpinned by world leading regulatory standards and open to global markets.
All of this must deliver real benefit for people and businesses in every part of our great country.
This is my vision for the financial sector in the decades to come: a sector at the very heart of the UK’s new role in the world; at the vanguard of global financial markets; and delivering for citizens and the real economy at home.
Main image credit: Getty