Author: Nicola Sharp 19 July 2023
Nicola Sharp of Rahman Ravelli outlines the UK’s agreement with the European Union to work closer together regarding financial services.
The recently-signed UK and European Union (EU) Memorandum of Understanding on financial services indicates a willingness by both sides to work together.
The Memorandum represents an increased level of cooperation regarding financial services. It was first outlined in the UK-EU Trade and Co-operation Agreement, which was drafted as a result of the UK losing full access to EU markets under Brexit.
While its contents can be viewed as shared objectives it is not a comprehensive agreement. Signing it does not commit the UK to aligning with EU regulation or restore the pre-Brexit access that the UK had to the EU.
There will be a forum set up for the EU and UK to meet twice a year to discuss what the Memorandum calls "voluntary regulatory co-operation on financial services issues" that will see “both sides will share information, work together towards meeting joint challenges and co-ordinate positions."
The signing of the Memorandum comes three months after the UK and the EU concluded the Windsor Framework in an attempt to address post-Brexit problems regarding the checking and movement of goods into Northern Ireland from Great Britain. Both can be viewed as signs that the UK is now more prepared to negotiate with the EU than in recent years, although the Memorandum makes no reference to any moves to ensure closer alignment on regulation.
Some within the Treasury have cited the Windsor Framework as having helped make the Memorandum possible. This could be cause for optimism as the UK and EU seek to resolve aspects of the post-Brexit arrangements that are yet to be concluded.
The EU accounted for 37% of UK financial services exports in 2019. Since Brexit, the UK has been able to retain its position as Europe's major financial centre. The number of jobs in UK financial services lost following Brexit is estimated to be fewer than 10,000, which is lower than expected.
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