Hammond to say financial services can be included in Brexit deal

Chancellor claims bespoke arrangement for UK with EU would serve interests of both

 British  chancellor Philip Hammond. “If it could be done with Canada or the US…it could be done with the UK – the EU’s closest financial services partner by far.”  Photograph: Getty Images

British chancellor Philip Hammond. “If it could be done with Canada or the US…it could be done with the UK – the EU’s closest financial services partner by far.” Photograph: Getty Images

 

Britain’s chancellor of the exchequer will on Wednesday appeal to European Union states to abandon their resistance to including financial services in a post-Brexit free-trade agreement. Philip Hammond will use a speech in London to argue that each of the EU’s trade deals has been unique, and that a bespoke arrangement for Britain would serve the interests of both sides.

“The EU has never negotiated the same arrangement twice. It has bespoke relationships with Turkey, Canada, Singapore, South Korea, Switzerland, ” he is expected to say. “A trade deal between the UK and the EU must start from the reality of today: that our economies, including in financial services, are interconnected; that our regulatory frameworks are identical.”

It is always possible – highly improbable but always possible – that the deal will come apart at the end for some wholly unpredictable reason

The chancellor will point out that the EU pursued “ambitious financial services co-operation” in negotiations with the United States on TTIP, a trade deal which failed to be agreed, and in its initial proposals for its free-trade agreement with Canada. In both of those cases the EU was seeking to promote convergence between entirely separate markets with different rules.

EU regulations

“If it could be done with Canada or the US…it could be done with the UK – the EU’s closest financial services partner by far,” he is expected to say. 

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“So I am clear not only that it is possible to include financial services within a trade deal, but that it is very much in our mutual interest to do so.”

In her speech at the Mansion House in London last week, Ms May suggested that Britain would continue to follow EU regulations in some sectors, and would seek to remain part of the European medicines, chemicals and aviation agencies.

After a meeting with the prime minister in Downing Street on Tuesday, the European Parliament’s Brexit negotiator Guy Verhofstadt said such an approach would be best for Britain.

“If the UK stays very near to the rules of the European Union that will secure jobs in Britain. That will be the best way forward for the British economy. My preferential choice would be that Britain still is part of the single market, still is part of the customs union, then most problems would be solved. That is not the wish of the UK government.”

Meaningful vote

Brexit secretary David Davis told a Commons committee on Tuesday that a “meaningful vote” by MPs on the final deal with the EU would not be able to reverse the referendum result. And he said the government would continue to plan for the possibility that it will leave the EU without a deal.

“It is always possible – highly improbable but always possible – that the deal will come apart at the end for some wholly unpredictable reason. A responsible government has to be ready for that outcome just as a matter of good practice.”