Brexit: Expert discusses 'importance' of UK financial services
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Brexit is a “golden opportunity for the City”, Dr Gerard Lyons wrote in a new strategy paper published by the Policy Exchange think tank. The former Chief Economic Adviser to Mr Johnson during his time as London mayor warned there was a need for “a strategy and vision” from ministers in order to make the most of the opportunities presented from leaving the EU.
Dr Lyons is urging the Government to take a more hands-on approach to help the City realise its potential in the face of fierce competition from the continent.
He claims Brussels is doing its utmost best to destroy the dominance of London as a centre for financial services and requires help from ministers to “push back” against the EU.
“The UK is facing an aggressive competitor in the form of the EU that is seeking to undermine the position of the City. While the UK should embrace open markets, the authorities here must stand their ground and push-back against the EU’s protectionist approach.
“It is time for the UK to push back with a consistent approach and a clear, positive message that changes the terms of the debate that is often pessimistic and wrong about prospects for the City,” he wrote.
“The City often prefers it when politics stays well away.
“However, on this occasion, the City needs a Government that is prepared to go into battle for it.
“The latest signals from this Government suggest room for encouragement.”
Dr Lyons call for action from ministers comes after financial services were largely ignored by the UK-EU trade deal negotiated last year.
Since then Brussels has been accused of dragging its feet on granting so-called equivalence status to Britain, which is having a negative impact on UK firms.
Equivalence would see the EU recognise the UK’s rules and regulations as similar enough to the bloc’s own that cross-border trade can be allowed to take place.
The UK has already given equivalence to the EU in a number of areas.
In March a memorandum of understanding on financial services was signed between the two sides, giving hope equivalence will soon be granted.
Despite the optimism, there are fears the bloc might demand the UK sign up to EU regulations as a price for equivalence.
Lord Frost, Brexit minister and former negotiator of the UK’s exit from the EU, earlier this week said Brussels was still looking at equivalence assessments sent by the UK almost a year ago.
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“We’re still waiting for the EU to complete those processes,” he told a House of Lords committee.
“Obviously the City needs to get on and do its own thing pending that and increasingly that is what has happened.”
Bank of England Governor Andrew Bailey has already warned Britain must not let itself become a rule-taker to secure equivalence, and in his policy exchange paper Dr Lyons urged the UK to diverge from EU regulations.
He wrote: “The UK should not be a rule-taker and should set its own approach within the framework of the highest international standards.
“The bias should be towards less burdensome regulation that holds back growth without enhancing stability.
“The focus should not be on gold-plating or on a race to the bottom but on smart regulation that makes sense in the areas to which it applies.
“Protecting consumer rights is essential.
“In future, regulatory success should be measured against the impact on the economy and on London’s competitiveness, as well as achieving financial stability.”
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