Brexit boost: Boris prepares to scrap EU red tape on finance rules to enhance global trade
Brexit: UK imports and exports evaluated by expert
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While the UK and EU conduct business under the Brexit trade deal, the agreement had no provisions for financial services such as banking or stock broking. The Treasury is now understood to be scrutinising pre-Brexit regulations, looking to axe red tape, amid a growing belief the EU will not give British financial services equivalence.
Rishi Sunak’s Treasury is preparing a number of reforms to the UK’s financial sector to attract global business, while maintaining there should not be divergence from the EU’s rules for its own sake.
Some reforms being examined by the chancellor include a reduction of the bank corporation tax surcharge.
Currently, the surcharge is set at 8 percent and applies to all banks with annual profits of over £25 million.
Others include a controversial lift on an EU cap on banker’s bonuses, and an overhaul on regulatory Mifid rules on fund managers.
According to the Sunday Telegraph, Whitehall sources are prepared for no equivalence between Britain’s financial sector and the EU’s single market.
Equivalence is the recognition that a sector meets a country or trading body’s standards of regulation, which the UK has granted to the EU in 28 different sectors.
The EU has so far refused to reciprocate equivalence to Britain’s financial sectors, with the exception of clearing, and has demanded details of the UK plans to diverge from the blocs rules.
One Whitehall insider told the outlet: “The situation was always going to be that we weren’t locked into their evolving rulebook.
“It was always going to be thin.”
City insiders have previously stated they do not expect to be granted equivalence to EU markets.
Nick Collier, the City of London’s representative in Brussels, told the UK Trade and Business Commission of lawmakers and industry representatives: “I don’t think equivalence is particularly an issue as we don’t think there is going to be any equivalence being granted by the EU.”
Emma Reynolds, managing director at TheCityUK, also stated the EU is pursuing an agenda of onshoring jobs from London.
She added: “The big question is have we hit rock bottom? Or are there further restrictions?
“Our member firms are not optimistic about further equivalence being granted.”
Insiders have also told the Sunday Telegraph Brexit Britain must concentrate on new global markets due to the EU’s refusal to grant equivalence.
Michael Spencer, tycoon and Tory donor, said: “This retrograde move necessitates that the UK take major steps to make London even more attractive for all financial services in the UK.
“In the long run excluding the UK will prove to be a major error by the EU.”
Barney Reynolds, City lawyer and advisor to industry lobby group TheCityUK, added: “We’ve got to start thinking for ourselves”.
France has recently delayed an EU financial services deal with Britain over a row about fishing access in Jersey.
Sources close to the French Government told Reuters Paris will delay the financial services deal until Mr Johnson grants EU fishermen fair access to British waters.
The Prime Minister’s spokesman responded: “This is another example of the EU issuing threats at any sign of difficulties instead of using the mechanisms of our new treaty to solve problems.
“We have always been clear that an agreement on financial services is in the best interest of both sides.”
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