EU’s ‘really aggressive’ stance leads to pivot on City of London finance deal

Dominic Raab dismisses EU threat to City of London

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The UK was hoping to strike a deal over the British financial sector’s role in Europe, which would allow for mutual recognition of financial service rules between London and the bloc. But despite a “memorandum of understanding” being provisionally agreed in March this year allowing for engagement on financial industry matters, no “equivalence” deal for the sector has been signed.

Bim Afolami, MP for Hitchin and Harpenden said the European Union was “not interested in equivalence.”

Mr Afolami, who is the Chairman of the All-Party Parliamentary Group for Financial Markets and Services, said this was despite the UK’s approach being “even-handed and generous”.

The MP said Brussels wasn’t keen on an agreement because of an “aggressive” approach taken by EU regulators who oversee financial services in the bloc.

He added: “I’ve seen the actions of EU regulators really quite aggressively trying to take businesses out of the UK and move them to the EU.

“I never really thought equivalence was going to happen.

“You cannot force someone to give you something they are not going to give you.

“It doesn’t matter how much money you put behind it or the quality of your argument, they have made a political decision to make equivalence in the vast majority of areas as difficult as possible.”

Looking to the future, the MP, who recently held talks with Chancellor Rishi Sunak, hinted that if the EU continued to be “unduly difficult” then Brussels could change their approach “in the future”.

He stressed the UK Government would “focus on the fundamental good reasons for doing business here, not just the regulatory ones.”

The comments are the latest sign Brussels is refusing to budge after Bank of England Governor Andrew Bailey said he saw no sign that the European Union was prepared to reopen its doors.

Mr Bailey told a recent news conference: “On equivalence, I think it’s fair to say that nothing really has moved forwards.”

However, Brussels has said they are concerned Britain will water down financial services rules in future if an agreement was reached.

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As a result, the European Commission decided to take a cautious approach with the UK on a financial services deal.

A spokesperson also said it would resume its equivalence assessments once its member states formally back a new regulatory cooperation framework with Britain.

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