The City minister has said the UK is “committed to working closely” with the EU on financial services rules today amid fears that growing divergence between UK and EU regulators will increase the regulatory burden on City firms.
Andrew Griffith, economic secretary to the Treasury, told City A.M. that the UK’s decision to leave the EU was not a vote to “turn inwards” and “exclude our friends from our markets”.
“The UK is committed to working closely with our neighbours in Europe, and with other international partners through the Financial Stability Board, Bank of International Settlement and other fora,” Griffith said.
“Whilst some details of our approach may occasionally differ to our friends, what will never falter is our commitment to the highest standards. To be clear, we will never diverge just for the sake of divergence,” he added.
The comments come after Griffith became the first City minister since 2016 to attend the pan-European finance conference Eurofi last week, where he addressed bosses on the future of the City.
Ministers have been looking to strip back red tape in the UK after leaving the bloc in order to free up the City. But fears have been swirling in the Square Mile over the potential sharp change in direction from the EU on financial services rules, which could add to the swelling regulatory burden facing firms.
In a recent temperature check on City firms’ regulatory burden, KPMG found that divergence from the EU on regulation was placing a growing strain on companies operating in both the UK and on the continent.
KPMG said that in spite of shared regulatory concerns, the “detail and timing of UK and EU policy solutions are starting to diverge”, which was making the situation increasingly complex for firms that operate in both jurisdictions.
UK and EU lawmakers signed a memorandum of understanding on financial services in June and has drawn up plans for “an ongoing forum for HM Treasury and the European Commission to discuss regulatory matters of mutual interest”.
While many figures in the City are hopeful the forum will ensure there will not be too much divergence between the two jurisdictions, the forum is yet to hold its first meeting.