Bank of England governor presses EU on finance deal for post-Covid stability

[LONDON] Bank of England governor Andrew Bailey on Wednesday pressed the EU to agree a post-Brexit financial services deal by next month for the sake of pandemic recovery on both sides of the Channel.

Rebutting some of the demands made by Brussels in return for the City of London to enjoy unfettered access to EU states, Mr Bailey said Britain had no intention of creating "a low-regulation, high-risk, anything-goes financial centre and system".

"We have an opportunity to move forward and rebuild our economies, post-Covid, supported by our financial systems. Now is not the time to have a regional argument," the UK central banker said in a speech.

Financial services - a key driver of the UK economy - were largely omitted from the last-minute Brexit trade deal agreed between London and Brussels in late December.

Both sides are instead working towards a March deadline to carve out an "equivalence" regime under which each would recognise the other's financial regulation.

From January 1, the UK financial sector lost access to the EU's single market and its European "passport", a device allowing UK financial products and services to be sold in the EU.

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The ability of the financial sector to do business in the bloc now hinges on obtaining equivalence across 59 specific areas.

Mr Bailey last month said up to 7,000 jobs have so far been relocated from London to rival centres in the EU - well down on doomsday predictions of as many as 50,000 losses.

He said Brussels was being unreasonable in its demands.

"The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards. This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself," he said.

Agreeing never to change UK financial regulation in future would be "unrealistic, dangerous and inconsistent with practice", given markets are constantly changing and the risk of unforeseen challenges like the Covid-19 pandemic.

And forcing Britain to march in lock-step with future EU regulations amounted to "rule-taking, pure and simple", and failed to account for the outsized share of UK finance in the global economy.

The EU should instead accept healthy competition, Mr Bailey stressed, arguing: "I believe we have a very bright future competing in global financial markets underpinned by strong and effective common global regulatory standards."

AFP