UK-US deal is welcome, but Starmer must get on with the EU
Our deals with the US and India reaffirm the UK’s role as a trading superpower, but it’s the EU we need to focus on, writes Chris Hayward
As Europe faces the dual challenge of rising geopolitical tensions and a difficult economic forecast, the recent VE Day anniversary was a timely reminder that prosperity and peace are built on collaboration.
From Leadenhall Market to Guildhall, events across the Square Mile underscored the enduring strength found in unity, a message that resonates all the more as leaders from the UK and EU prepare to meet in London next week to discuss the future of our relationship.
At what feels like a pivotal moment for the continent, we hope to see a renewed focus on deepening economic cooperation, particularly in financial services. The UK and EU remain each other’s most significant trading partners in this sector, and with the global economy facing headwinds, from escalating conflicts to IMF and OECD downgrades, closer collaboration is a necessity.
The UK’s role as a trading superpower
Recent trade announcements have reaffirmed the UK’s role as a trading superpower. The newly signed UK-India trade deal is a milestone in our bilateral ties. India is a vital strategic partner, and this agreement reflects our shared ambition to boost investment, deepen trade and foster long-term collaboration. The City of London Corporation has long supported stronger UK-India relations, exemplified by the launch of the UK-India Infrastructure Financing Bridge, which I co-chair in partnership with the Indian government. This initiative is helping to scale and finance critical infrastructure across India, drawing on the City’s deep capital markets expertise. I look forward to advancing this work during my visit to India this autumn.
Meanwhile, a separate agreement with the United States signals renewed momentum in transatlantic economic ties. This deal to reduce tariffs reinforces the UK’s position as the best place for business investment. Like many, we will be closely examining the details, but this deal sends the right signals worldwide and cements the already solid foundations of the UK-US economic relationship.
Still, our closest and most immediate opportunity lies with our European neighbours. The EU accounts for 34 per cent of UK financial services exports, valued at £33.6bn last year, balanced by around €280bn (£237bn) of EU services exports to the UK, nearly a fifth of the bloc’s total exports to third countries. We share history, values and deep economic ties. What we need now is the political will to modernise our relationship.
Modernising our relationship with the EU
To unlock this opportunity, we must deepen our financial ties. In an era of rising security demands, capital must flow quickly and efficiently to the industries that protect our shared values. The financial services sector has a huge role to play in enabling defence investment. We hope to see action on breaking down barriers to defence financing across the UK and EU.
And we need stronger, more interconnected capital markets. This is not a zero-sum game. Seeing regular dialogue between the UK and EU Financial Regulatory Forum, and a framework like the UK-Swiss Berne Financial Services Agreement, could set the standard. We’d be creating certainty for firms, unlocking innovation and supporting growth across the continent.
Recent steps taken by the EU to make it easier for UK professionals to work across the continent are welcome. These industries – engineering, banking and law – all live at the heart of the City of London and our nation’s economy, and the ability to move talent freely is a competitive advantage.
Together, we can turn a new page to leave the era of uncertainty behind and write a new chapter of cooperation.
The UK’s capital markets remain a global asset. In a world of economic instability, London offers a safe, stable home for international capital. Investors know the UK stands for the rule of law, transparency and innovation. Let’s use that strength to the benefit of the whole continent.
The stakes are too high, and the opportunities too great. With vision and commitment, the UK and EU can chart a new course, one defined not by the past, but by our shared future.
Chris Hayward is policy chairman at the City of London Corporation