The UK is the world’s leading exporter of financial services. Within that, there are few better success stories than the special relationship that we have built with the United States.
The benefits for both sides are obvious. Every day, a million UK citizens go to work for US firms, while the same number of US citizens go to work for UK firms.
All 50 US states have jobs that are connected to investment by a UK company. We are the single largest investor in each other’s economies, and much of this facilitated through businesses in the City of London.
For decades now, London has acted as a gateway to the European and wider global economies for US banks, such as Bank of America Merrill Lynch and Wells Fargo – both of which have made commitments to stay here long into the future.
It’s important to recognise how essential it is to protect this relationship, and develop it further.
As well as maintaining the best possible access for US firms to European markets after Brexit, we see huge potential to build on the inherent trust that exists between our key institutions.
That may well come within the framework of a full free trade agreement (FTA) including services, and we would support its broadest objective of developing a special bilateral trading relationship for the future.
That doesn’t mean though that financial services should be sidelined for the sake of quick political gain. Above all, we need to do what is right for business.
Indeed, an FTA isn’t a necessity for the financial services sector on either side of the Atlantic. That’s why I’ll be advocating that any FTA process should be complemented by parallel initiatives focused on deepening regulatory and supervisory relationships.
The best example of this is in regulation. Firms tell us that most of the existing barriers to doing business from one jurisdiction to another could be solved by better regulatory coherence.
This is something that could be created through a bilateral “regulatory highway” based on mutual recognition of regulatory outcomes (or “deference” in American parlance).
This is without doubt an opportunity with huge potential.
The trust between our respective institutions means that we have the chance to use this regulatory highway to jointly influence and lead the global trading framework.
In fact, the cornerstone for the US and the UK’s success together within financial services has been support for both that international multilateral framework and global free markets.
Trade is a long-term game; a flourishing trading partnership is one that constantly reassesses itself and evolves accordingly, in order to continue to benefit all parties.
We may be operating in a time of substantial political flux, but we’d be making a serious mistake by missing this opportunity. Failing to take advantage would have negative implications for households and businesses in both of our countries, risking the stability of markets ten years after the crisis.
Instead, I look forward to seizing the moment and realising our full potential together.