UK to push for financial services to be part of post-Brexit deal

Chancellor warns that weakening London as a financial centre could expose EU to a crash

Britain’s chancellor of the exchequer Philip Hammond: said the EU should also outline what kind of relationship it wants with Britain after Brexit. ‘It takes two to tango.’ Photograph: Luke MacGregor/Bloomberg

Britain’s chancellor of the exchequer Philip Hammond: said the EU should also outline what kind of relationship it wants with Britain after Brexit. ‘It takes two to tango.’ Photograph: Luke MacGregor/Bloomberg

 

Theresa May will meet the leaders of major financial firms on Thursday as Britain steps up its efforts to persuade the European Union to include financial services in a post-Brexit trade deal. The prime minister and chancellor Philip Hammond will seek to reassure the companies, including Goldman Sachs, HSBC, Barclays, Aviva and Prudential, that the City will be protected after Britain leaves the EU.

The EU’s chief negotiator, Michel Barnier, said last month that a future trade deal could not include financial services, which employs more than two million people in Britain and accounts for more than a tenth of its GDP.

Writing in the Frankfurter Allgemeine Zeitung on Wednesday, Mr Hammond and Brexit secretary David Davis warned that weakening London as a financial centre could make Europe more vulnerable to a financial crash.

“We must redouble our collective effort to ensure that we do not put that hard-earned financial stability at risk, by getting a deal that supports collaboration within the European banking sector, rather than forcing it to fragment,” they said.

European politicians complain that Britain has yet to decide what it is looking for in talks on a future relationship with the EU. But in Berlin on Wednesday night, Mr Hammond said the EU should also outline what kind of relationship it wants with Britain after Brexit.

“They say it takes two to tango. Both sides need to be clear about what they want from a future relationship,” he said.

“I know the repeated complaint from Brussels has been that the UK hasn’t made up its mind what type of relationship it wants, but in London, many feel that we have little, if any, signal of what future relationship the EU27 would like to have with a post-Brexit Britain.”

Divorce bill

Earlier, Britain’s National Audit Office (NAO) said it would investigate Ms May’s decision pay up to £39 billion (€44 billion) to the EU as part of the withdrawal agreement. Neither Britain nor the EU have put a precise figure on the divorce bill, but Downing Street has suggested it will be between £35 billion and £39 billion.

Sir Amyas Morse, head of the NAO, said the auditors would report on the main elements of the financial settlement and that he expected the report to be published in late March.

MPs on both sides of the Brexit debate suspect that Britain and the EU are playing down the size of the financial settlement and that it will turn out to be much bigger than reported. Nicky Morgan, the Conservative chair of the Commons Treasury Committee, said she asked the audit office to investigate if the bill is reasonable and how it was calculated.

“Various wide-ranging sums for the UK’s withdrawal payment to the EU have been bandied about. Last month, the prime minister told parliament that the so-called Brexit divorce bill will be £35 billion to £39 billion. Parliament must be able to scrutinise the reasonableness of this bill. Accordingly, I have written to Sir Amyas to request that the NAO examines the withdrawal payment, including the assumptions and methodologies used,” Ms Morgan said.