Last night, the Chancellor, Phillip Hammond addressed finance leaders at Mansion House, where he urged them to turn their gaze from the European Union to a Post-Brexit Britain. Hammond correctly identified that the British finance industry, the envy of the world, has much bigger fish to fry than the European Union.
The UK is looking to forge new regulatory partnerships with financial hubs around the world. Such a move would allow the UK to work alongside major players such as New York, Tokyo, Singapore or Hong Kong with transparent and sound legal frameworks that will stand to benefit both parties.
As the EU rebuffs the suggestion of working on a mutual recognition basis with the world’s largest financial centre, other hubs, with no political motivations, have no such qualms, and would be willing to enter into a new partnership with the UK.
The UK is an attractive location for investors; we have one of the strongest legal systems in the world, with an independent court system and one of the best and oldest democratic systems. Not only do we have the most efficient insolvency and restructuring laws, but our tax incentives and financial structures are almost unparalleled. Financial hubs around the globe strive to learn from the way London operates.
Although the EU is aware of the importance of the British financial markets, it is only intent to punish the UK by favouring an agreement known as “enhanced equivalence”, which would offer the UK access to EU financial markets but only on terms dictated by the EU. The Chancellor was completely correct when he said that such an arrangement was just simply “ambition to force the location of business into the EU”.
So now it is time for us to look beyond the EU, which allows us to connect to other parts of the world. Brexit provides the UK with the ability to look towards these markets that the EU is ignoring, connect with world and ensure the City of London continues to prosper.
But this does not mean we ignore the EU. It is and always will be an important partner but rather we need to be focussed on the entire globe, including the EU. Global co-operation in regulation is essential, we have much to offer the world and we can learn so much from other countries. We are heading into a “new world order”, where emerging markets could account for a growing share of global financial assets. We must be able to trade on our competitive advantages to all parts of the world, both in the EU and beyond it.
In doing this the UK will be able to build a system for opening up cross-border financial services, supporting firms’ access to global financial markets, and reducing the cost to businesses.