Pressure is mounting on the UK government to prioritise financial services in any new trade deals struck in a post-Brexit world as it faces renewed calls to safeguard the lucrative industry.
A new report released by lobby group TheCityUK has called for “enhanced attention” to be given to Britain’s financial services sector, which it said is a primary driver for UK economic growth, employment and competitiveness.
“It is essential that the UK’s comparative and competitive advantages in UK-based financial and related professional services are fully reflected in UK trade and investment policy objectives,” the Future UK Trade and Investment Policy report said.
“If greater market access can be secured for them, there will be positive multiplier effects for the other UK sectors that they serve, with added benefits for the UK economy as a whole.”
The report highlighted that the UK is the world’s largest exporter of financial services, with exports worth £77.5 billion in 2015.
The sector – which includes banking, insurance, accountancy and asset management – employs more than 2.2 million people and accounts for about 11 per cent of UK tax receipts.
“It follows that, in TheCityUK’s view, no UK trade or investment agreement should be concluded without these interests being addressed fully and satisfactorily.”
The lobby group has stopped short of urging the government to maintain passporting rights, which gives financial services open access to the EU’s single market. TheCityUK has instead urged it to secure similar mutual-market access for the sector.
Prime Minister Theresa May has faced growing pressure over the future of Britain’s financial services after announcing she would scrap single market membership.
The move will effectively end passporting rights, and raises the possibility of industry jobs shifting to rival EU financial centres such as Amsterdam, Paris, Frankfurt and Dublin.
She reportedly faced “tough” talk from the likes of Goldman Sachs chief executive Lloyd Blankfein at the World Economic Forum in Davos earlier this month.
Blankfein has said New York is already gaining from Brexit as the US bank pulls back on previous plans to shift operations to Britain.
There have been repeated warnings that London could lose out to rival financial hubs unless the City is given greater priority in Brexit negotiations.
A separate report released by global law firm Hogan Lovells and the International Regulatory Strategy Group (IRSG) – which is sponsored by TheCityUK and the City of London – has called for a bespoke agreement between the EU and UK that would safeguard the industry and prevent the fragmentation of financial markets.
After Brexit, the UK would be defined as a “third country” in the eyes of EU regulators but the IRSG warned that existing arrangements with third countries that reach “equivalency” standards lack key safeguards and are not a long-term solution for the industry.
It insists that the “cooperative relationship” between the EU and UK needs to be maintained, which means “avoiding the imposition of new barriers between the two markets when Brexit occurs”.