Last Friday, prime minister Theresa May set out to the cabinet her Brexit plan for Britain: a principled, practical approach that can deliver a good deal for the UK. We must now bring the country together behind this clear vision. This is a unique opportunity to shape our economy’s future as we forge a new relationship with the EU.
Last Friday, prime minister Theresa May set out to the cabinet her Brexit plan for Britain: a principled, practical approach that can deliver a good deal for the UK. We must now bring the country together behind this clear vision. This is a unique opportunity to shape our economy’s future as we forge a new relationship with the EU.
Britain’s successful service sector — and our world-beating financial services industry in particular — has always been at the heart of our plan. I am resolute that we have to secure a deal that allows the sector to continue to flourish. For goods, our proposal for a free-trade area with the EU ensures continued friction-free commerce with our biggest trading partner, as well as delivering on our commitment to the people of Northern Ireland.
This is not about prioritising goods over services. It is about unlocking and accelerating talks with the EU — including on financial services. Business and political leaders can agree on the need to get on with it. Although it has not always felt like it, we must remember that this is ultimately a negotiation with Brussels.
We start from a unique point because of our present relationship with the EU. Our financial regulatory frameworks are in effect identical. It is inconceivable that the mutual benefits of this relationship could be preserved by an “off-the-shelf” model, such as the EU’s existing equivalence framework for third country financial services relationships. Many of our EU partners understand this.
Some have been talking about enhancing the existing equivalence regime to provide a basis for future EU-UK financial services market access. At Canary Wharf back in March, I suggested a new model based on mutual recognition and regulatory and supervisory co-operation.
I argued that the UK could not become a rule-taker in financial services and why the standardised equivalence regime would not work. But I do understand that it is difficult for the EU to accept any arrangement with a third country that constrains its decision-making in critical areas. And the bloc also has a legitimate interest in controlling decisions that affect financial stability in the eurozone.
Time is tight. We must now work with our EU neighbours on a pragmatic solution to preserve the mutual benefits of integrated markets while addressing the sovereignty concerns of both sides. In the government’s latest Brexit white paper, published on Thursday, we set out a realistic framework that provides sufficient stability and certainty for the market to operate. This is less than mutual recognition, but it is more than the EU’s equivalence regime. It is a model that preserves the stability, transparency and certainty of the former, while respecting the sovereignty of the latter.
This arrangement would have at its heart a bilateral agreement between the UK and the EU, defining how the relationship will be managed. It would ensure that any changes to equivalence decisions are preceded by appropriate dialogue and follow an agreed process for implementation, so the City of London has a solid basis on which to make long-term plans.
And it would give both sides the most effective tools to maintain compatible rules over time, while retaining our sovereignty. Our financial services proposal works for the UK, works for the EU, and works for business. We have a plan that will ensure friction-free trade in goods, an open border in Ireland and a global future for our world-leading service industries.
It is a plan that delivers on the government’s pledge to take back control of our borders, our laws and our money. Now the EU needs to engage with us in a spirit of pragmatism, to move forward in the interests of businesses and people in Britain and Europe.
