- The UK is set to propose the mutual recognition of financial services regulations with the EU after Brexit, according to the Financial Times.
- Chancellor Philip Hammond is believed to be ready to set out the proposal in a speech next week.
- The government is said to back the proposals, while Bank of England Governor Mark Carney is also reportedly in favour.
LONDON – The UK is about to set out its vision for the future of the City of London post-Brexit, and is said to favour a system based around mutual recognition of rules and regulations governing the financial sector in Britain and the EU, according to a report from the Financial Times on Friday.
The plans, which Chancellor Philip Hammond is believed to be ready to set out in a speech next week, would essentially mean the UK recognising EU regulations around the financial services industry, and the EU doing the same with the EU, with both sets of rules closely aligned.
Doing so would be intended to minimise disruptions to doing business between the UK and EU, following the UK’s loss of financial passporting rights with the rest of Europe after Brexit.
The financial passport is effectively set of rules and regulations which allow UK-based finance firms to trade with and sell their services into Europe. It is tightly linked to membership of the single market, so will not apply to the UK once Britain leaves the EU, given the government’s desire to also leave the single market.
“They are going down the route of mutual recognition,” a person described by the FT as a “senior figure briefed on Brexit discussions in the cabinet” said.
“Under the British plan, the UK would commit to keeping its financial regulations in line with EU rules, and would cede authority to a dispute resolution mechanism to calibrate the City’s market access or impose other conditions – for example higher capital requirements – if one side was seen to be breaking the spirit of the agreement,” the Financial Times said.
The government is said to back the proposals, while Bank of England Governor Mark Carney is also reportedly in favour.
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