The head of the City of London Corporation, Catherine McGuinness, has spoken to the Boris Johnson administration that financial services have been taken for granted and overlooked the City of London during the last two years of the Brexit talks.
McGuinness, the political leader of the powerful local government, told City AM today that she “wants to see the important [financial services] Sectors … will be more in focus in the future. “
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McGuinness said London financial firms were deeply concerned that financial services, which account for around 7 percent of UK GDP, have been overshadowed by fishing during negotiations, which account for around 0.1 percent of UK GDP.
The UK financial services sector lost its access to EU markets and passport rights before Brexit.
“In the last few months in particular, we’ve felt that fish and other parts of the economy that are really tiny by comparison have attracted a lot more imagination than this really large part of the economy,” said McGuinness.
“It may have been assumed that the big companies could fend for themselves.
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“Yes, they can, but it means relocating some of their business, so it’s not necessarily a good thing in our view.”
Johnson’s Brexit trade deal does not include an EU-wide agreement on financial services; instead, British companies have to negotiate a patchwork of regulations from individual EU states.
This has forced major UK banks to move more than £ 1 trillion in assets and thousands of jobs to the EU’s financial capitals to avoid disruption.
The City of London can only maintain its access to the EU before Brexit if Brussels unilaterally grants equivalence of the legislation. However, the bloc believes the UK is destined to deviate from its financial services regulations and has withheld expulsion.
Treasury Secretary John Glen will hold talks with the EU this week to approve a Memorandum of Understanding by March that will guide future regulatory cooperation on financial services. However, equivalence is not expected to be on the table.
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Chancellor Rishi Sunak told City AM’s City View podcast yesterday that the City of London was poised for a post-Brexit “Big Bang 2.0” that would reflect the growth phase of the UK financial sector in the 1980s.
“If you look at the history of the city, which goes back even further, it has constantly evolved, adapted to changing circumstances and evolved, and it has flourished and prospered. And I think it will continue to do so, ”he said.
McGuinness was less convinced of Sunak’s claim, but added that the city can survive and adapt even if the EU does not grant equivalence.
“It’s hard to see how we would change as much as we did at Big Bang because that was a massive change,” she said.
“Nobody is asking for a big bonfire of regulations or a major restructuring of what we have.
McGuinness added: “We have to take our fate into our own hands, we have to find the best way forward and what I would say to the rest of the world is not to underestimate the UK. ”
The UK decided in November that the EU would largely retain access to UK financial markets. However, Brussels did not complete its equivalency assessments before the Brexit transition period ended on December 31.
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Brussels granted equivalence to the UK clearing houses in order to be able to continue working temporarily, which was deemed necessary to protect financial stability.
The City of London exported £ 25 billion in services to the EU in 2019, nearly half of the total amount of financial services exported by the UK that year.