Labour is still committed to getting a post-Brexit equivalence deal for the UK’s financial services sector if elected, shadow chancellor Rachel Reeves has said.
Reeves told TheCityUK’s national conference today that, if elected, Labour will “fix some of the holes in the patchwork Brexit deal with the EU”.
The UK’s financial services sector has not been granted equivalence by the EU post-Brexit, which means the City has lost its wide-ranging access to European markets.
Brussels only grants equivalence to outside countries if they keep their financial services regulations within the orbit of the EU’s.
Chancellor Rishi Sunak has already outlined a number of changes he wants to make to the UK’s financial services rulebook post-Brexit, including changing share listings rules to attract more tech unicorns to go public in the UK, allowing blank-cheque Spacs to list in London and reducing capital requirements for insurance firms.
Reeves said that Labour still supports trying to get some sort of equivalence deal with the EU, after her predecessor Anneliese Dodds outlined these ambitions last year.
“I want to ensure we’ve got the widest possible agreement [on equivalence],” she said.
“The current government hung financial services out to dry during Brexit negotiations, but it wasn’t the only sector to experience this damning approach. We will make practical improvements to build on the national interest.”
The vast majority of UK-based financial institutions were prepared to lose its pre-Brexit access to the EU from January this year.
Financial services institutions moved more than £1 trillion of assets and 7,600 jobs from London to other European capitals in anticipation of the UK not getting equivalence post-Brexit, according to EY figures.
This is far less than was expected.
London also lost its crown as Europe’s share trading capital in January, after a flow of transactions switched to Amsterdam.
The UK’s capital has since caught up and share trading activity is very similar across London and Amsterdam.
Speaking about the prospect of equivalence in July, Sunak said: “We are moving forward, continuing to cooperate on questions of global finance, but each as a sovereign jurisdiction with our own priorities.
. “We now have the freedom to do things differently and better, and we intend to use it fully.”