According to the British Finance Minister, Britain and the European Union share a common interest in a bilateral free trade agreement that extends to financial services.
Philip Hammond, speaking on a London business event Wednesday, said: The London financial services sector is a center of strength that is not only a driving force for the UK economy but also for the whole of Europe.
According to Hammond, London City’s financial center was not created by the EU’s passporting system – a mechanism for lending the lending banks in the euro area of London – but as a mix of elusive factors such as English, English legal system, time zone, networking networks, risk appetite and regulatory attitude. All this together created an “ecosystem” that would be impossible to duplicate elsewhere.
Hammond drew the attention of European Union policy-makers to the fact that the UK economy has huge benefits from the huge London financial center, but the risks of operating this financial center are also borne by the British economy and British taxpayers are in the position of taking these risks. “We learned this at our very real cost during the financial crisis when taxpayers donated 136 billion pounds (48,000 billion forints) to financial industry companies,” Hammond said.
He added that the deep capital market in London City, accumulation of expertise and regulatory competence provides efficient, secure and high quality services to the economies of the European Union as well. Two thousand thirds of debt securities and shares issued by EU-resident companies are managed by London banks, 75 percent of EU currency trading and 74 percent of the market for derivatives derived from interest-rate derivatives are on the London financial services market. British Finance Minister.
According to Hammond, the benefits of this huge service market are shared by all 28 EU economies.
The minister has also sent a clear message to potential competitors competing in the EU to tempt banks to tempt banks, saying that the big winner of the “cracking” of the London market would not be Paris, Frankfurt, Dublin or Luxembourg, but more likely to be New York, Singapore or Hong Kong.
According to Philip Hammond, “it is time to turn to those who are doubtful” who argue that there is no free trade agreement that extends to financial services, just because it has not been the case yet.
“I say to them: the EU has so far signed each trade agreement, the EU has never concluded two such agreements on the same terms,” the British Finance Minister said.
Hammond’s argument, however, is in the forefront of the position that is regularly expressed by EU leaders.
Michel Barnier, the Brexit chief negotiator of the European Commission, has recently stated that “there is no free trade agreement that would be open to financial services … that does not exist.”
French Business Minister Bruno Le Maire said that financial services have no place in FTAs for a number of reasons, for example because of stability reasons and not because of the very specific nature of this type of service.