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Treasury seeks ambitious post-Brexit ties for City beyond EU

·2-min read

The Treasury is seeking to secure the City more ambitious trade ties outside the EU, including deeper mutual recognition deals, after financial services were shunned in the Brexit agreement.

John Glen, the City minister, said the UK would pursue “deeper dialogue” on financial services with a number of trading partners, including Australia, India and Brazil, to help the Square Mile “thrive outside the EU”.

“When it comes to developing a more open industry, we've been working hard seeking new international financial services agreements,” said Mr Glen, who is also economic secretary to the Treasury.

“We've already signed a number and we're continuing the financial services dialogues with other countries, including the US, New Zealand, Australia, Japan, Switzerland, Singapore, China, India and Brazil.”

He told the City Week conference: “It's often about a deeper dialogue, it's actually looking at mutual recognition agreements and indeed, as we have with Switzerland, we're pursuing an extremely ambitious [agreement].”

Financial services were given a bare-bones Brexit deal, with the EU only granting the sector better access in a limited number of equivalence decisions.

Mutual recognition is a deeper relationship whereby countries agree each other’s rules are good enough, allowing greater access for their firms. Earlier this year the UK and Switzerland started negotiations on a mutual recognition agreement to roll back barriers to each other’s markets.

Mr Glen said: “While openness means deepening international relations, we think it also means improving our own domestic competitiveness too so that we can take full advantage of our new position on the world stage. And that means creating the right conditions for industry to thrive outside the EU.”

Under the free trade deal struck with Australia last week, the UK will enjoy stronger financial services ties. The deal was praised by lobby group TheCityUK for showing “real ambition to improve global services trade” and demonstrating that Britain could “negotiate real commercial benefits”.

However, Mr Glen said there was still much more to be agreed with Australia.

“We've got a regulatory co-operation annex in the UK-Australia free trade agreement. That needs more work so that we can actually get to the destination we ultimately want to get to,” he said. “That involves a lot more dialogue than can be achieved in a simple handshake moment.”

In addition to discussions on financial services with Australia and Switzerland, the UK will also hold talks with Brazil later this year and has made services a priority in a mooted India trade deal.

The UK remains Europe’s most attractive destination for financial services investment but France is closing the gap, according to a new EY report.

Britain won investment for 56 financial services projects in 2020, a sharp fall on the previous year and only seven more than France. Britain’s rival enjoyed increased investment last year despite the pandemic.

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