The UK is looking to align its financial services regulation with major economic powers outside the EU, according to Rishi Sunak.
The chancellor said today at a fringe event at the Conservative conference that the government will “review our regulatory framework” on financial services and that “not being inside the EU more generally gives us a chance to do things differently”.
City of London firms are still waiting to find out if they will have access to the EU’s financial markets after the UK leaves the bloc’s single market and customs union on 31 December.
Brussels only allows grants non-EU countries access to European financial markets if they have similar regulations in a process known as equivalence.
European Commisioner for financial services Valdis Dombrovskis said earlier this year that the UK may have to negotiate financial services access on a country-by-country basis as it could take a long time for the equivalence assessments to be completed.
The large majority of City of London firms have made plans if they lose their current EU access on 31 December.
Sunak said today that the UK may choose to instead align its regulations with financial centres in New York, Tokyo and Hong Kong.
When asked if the UK would choose to create close regulatory alignment these trading centres, Sunak said: “I think so. We’ve said we’ll have a review of our regulatory framework.
“We need to get that balance right between regulators, parliament the Treasury, make sure there’s accountability but also flexibility to respond.
“Not being inside the EU more generally gives us a chance to do things differently.”
He added: “The world comes to London to trade, to buy, to sell, to raise capital, to invest. I want that to remain the case, it’s a source of pride and strength for our economy.
“Things have to be slightly different now we’re outside the EU and they will be.”
Sunak used his party conference speech earlier today to say that the UK needed to make “hard choices” on public spending.
The chancellor has spent more than £190bn on emergency Covid measures, however in his speech he signalled there would eventually need to be budgetary cut backs and tax rises.
Sunak said at the fringe event afterward that it was a problem finance ministers faced across the western world.
“I think it’s right almost all countries have been borrowing at scale this year to provide fiscal support for their economies and it’s the right thing to do through this acute period,” he said.
“Most of us will be left with a structural difference in revenues and spending…and that will need addressing across the board.”
The chancellor also said at the event that the UK would prioritise climate change policy when it hosts next year’s G7 summit.
Sunak said “tackling climate change is something we will champion very hard next year”, while also highlighting the UK’s “competitive advantage” on offshore wind power and carbon capture technology.