Britain’s banks have written to Theresa May and Philip Hammond warning that a Canada-style free trade agreement with the EU post-Brexit is not ambitious enough and that alignment with EU rules on finance is crucial.
The open letter from UK Finance, which represents major banks and other financial institutions, said the government must place the City at the centre of Brexit trade talks or risk dealing a major blow to the economy.
“Ceta [the Comprehensive and Economic Trade Agreement between the EU and Canada] is an interesting template, but given the UK and the EU 27 start from a position of regulatory convergence that the UK and Canada didn’t have, we should seek to be far more ambitious,” said the letter.
The banks congratulated May on successfully negotiating a move to the second phase of withdrawal negotiations with the EU, which it called the first substantive evidence that a final deal could be agreed.
But the trade body called on the government to avoid a cliff-edge Brexit and broker a smooth transition by focusing on alignment with Europe.
“Pragmatic decisions to align the two regimes from a regulatory perspective … should be seen not as concessions, but as mechanisms to maximise benefits and choice within a deep regional capital market for the benefit of citizens and our economies,” it said. The alternative is “an unnecessary loss” of GDP, it added.
“A high degree of mutual cross-border market access is fundamental to the continued success of our financial services sector – and to the success of the economies and citizens which our sector serves in the UK and the EU 27,” UK Finance wrote.
The letter reflects anxiety in the UK about London’s future as a major financial centre after Britain leaves the EU in March 2019. Banks have made contingency plans to move jobs from the UK to other European cities such as Frankfurt, Paris and Madrid in order to guarantee continued access to the single market after Brexit.
The boss of Goldman Sachs, Lloyd Blankfein, piled pressure on Theresa May in October in a teasing tweet that said he would be “spending a lot more time” in Frankfurt from now on.
He tweeted: “Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit.”