London financial centre hopes to rebuild bridges with EU

An agreement would be a rare fillip for the City of London, which last year lost the top spot among Europe’s stock markets.

UK Prime Minister Rishi Sunak’s deal to solve the bitter dispute with the EU over Northern Ireland’s trading arrangements has sparked hope in the City of London that the two sides could finally formalise a pledge to work together on setting rules for banks and financial markets. 

Delayed for two years as other battles rage, the financial agreement is expected to gather fresh momentum if the so-called Windsor Framework gets passed by the UK parliament.

A memorandum of understanding on financial rules may seem like a fairly low bar for such economically-tied neighbours. But in the recent history of post-Brexit relations, it would count for progress.

“We are ready to start work on the finalisation of the MOU on financial services regulatory cooperation,” said European Commission spokesman Daniel Ferrie. 

For optimists, the financial agreement could lead to joint thinking between the UK and the European Commission over issues including money laundering, green finance, and cryptocurrencies.  

An agreement would give “the opportunity for the UK and the EU to have more constructive discussions on how our financial services industry should look,” Tiina Lee, head of UK and Ireland at Deutsche Bank said. 

It would "improve the mood music", she said.  

An agreement would be a rare fillip for the City of London, which last year lost the top spot among Europe’s stock markets. But plenty say it would be largely a symbolic one.

The UK has got almost nowhere trying to win equivalence agreements from the EU since Brexit. For Jonathan Hill, a member of Britain’s House of Lords and the EU’s former Commissioner on Financial Services, that is not a surprise. 

“An equivalence decision is a plum to give, and why would you give that before you know you want to give it and in exchange for something else?” Mr Hill told a House of Lords committee. 

Bloomberg