Improving the dialogue with the EU after “Brexit” under the new Labor government of Keir Starmer may help the City of London, but will not allow to recover the losses of recent years, according to experts.
British cabinet member Nick Thomas-Symond visited Brussels. He went to the EU capital immediately after the election of Labor, which made rapprochement with the bloc one of the themes of its election campaign.
Thus, Prime Minister Keir Starmer promised to correct the “failed” deal on “Brexit” by easing, for example, the conditions of border control. However, he has not yet specified what he intends to do for the British financial services sector. Which hopes to soon benefit from warmer relations with the EU.
Rules, barriers, delays…
“I hope that a more positive and constructive working relationship will be established between the UK government and the EU,” said Chris Hayward, the head of the City of London. – “We want guarantees that we will not have barriers for access to the international market.”
The financial sector of Great Britain, which accounts for about 12% of the country’s GDP, took the brunt of Brexit. Boris Johnson’s agreement to leave the EU promised the parties a relationship based on the principle of equivalence. UK rules were deemed sufficiently similar to EU rules to allow for limited reciprocal market access in a number of sectors. But Brussels, according to observers, is taking time. So far, he has proposed equivalence only in the field of financial clearinghouses.
The EU signed a memorandum defining the details of cooperation after “Brexit” only in 2023. Hayward, who is backed by the financial sector lobby, is convinced that after so much upheaval, progress will not be quick.
“After a painful divorce that lasted seven or eight years, you can’t suddenly go back to work as if nothing had happened,” he believes. “We need to restore trust, it takes time.”
Can’t bring back the past?
Indeed, the financial sector has taken a backseat to claims of a reset in UK-EU relations. Starmer’s representatives in Downing Street said that support for Ukraine and the fight against climate change are likely to be priority areas of cooperation.
Incorporating financial stability issues into the promised new security pact between Britain and the EU against this backdrop is difficult, but not impossible, some observers say. And many representatives of the financial sector believe that it is too late to put the genie back in the bottle. “No one in London expects that what has been transferred from the UK to the EU will ever come back,” says William Wright, chief executive of the New Financial think tank, citing the example of around 500 City firms that have already applied for obtaining new licenses, opened offices or transferred staff to the EU. “What’s over is over,” he sums up.
Financiers thus focus more on the future. It is understood that the EU and London should clarify equivalence rules, making it easier for British investment firms to serve clients on the continent. A proposal has been announced, according to which foreign organizations will be able to simply pay for their activities to be recognized as compliant with EU rules…
Progress in areas such as technology regulation can also help the innovation-driven financial sector. And Keir Starmer’s commitment to mutual recognition of qualifications will support British professionals, such as accountants and auditors, who often work with the EU.
There are many development vectors. But William Wright warns the new government against excessive haste. “Be more modest, take your time, listen to the EU,” he urges. “Don’t rush in with unreasonable demands.”