Brexit starts a new chapter for Britain to think “creatively” about keeping the UK an attractive location for international financial services companies, Britain’s finance minister Rishi Sunak told the Bank of England.
Britain left the EU’s single market on Dec. 31 and its trade deal with the bloc does not cover cross-border financial services.
“This will present new opportunities for both the government and regulators to think creatively to ensure that the financial system supports the recovery from coronavirus, while ensuring the UK remains an attractive domicile for internationally active financial institutions,” Sunak said in a letter to the BoE’s Financial Policy Committee (FPC).
The government faces pressure to step up efforts to keep the City attractive now that it is largely cut off from the EU.
Swathes of stock and swaps trading have left for the continent and Brussels is now targetting euro clearing activity still based in London.
The FPC plays a key role in setting the direction and tone for regulating banks, insurers and asset managers, is chaired by BoE Governor Andrew Bailey, and includes the chief executive of the Financial Conduct Authority.
Sunak said the government is committed to UK financial services being effectively regulated and “robust” capital rules for banks.
But leaving the EU means that “we have taken control of decisions governing the sector and can be guided by what is right for the UK,” he said.
Sunak said he expects the FPC to make use of these opportunities to support the government’s economic policy towards the financial services industry, a sector that accounts for 10% of UK tax takings.
A review ordered by Sunak on Wednesday set out looser listings rules for London to compete better with New York, the EU and Asia, and for UK regulators to have a remit to keep the sector competitive.
Last week, Sunak announced a fast-track work visa scheme for growth companies to preserve London’s footprint in the global financial technology sector.
Separately on Wednesday, the BoE said it would rethink its approach to the purchase of corporate bonds issued by firms that have a large impact on climate change, after Sunak asked it to take greater account of environmental policy.
(Additional reporting by David Milliken; editing by Toby Chopra and Jonathan Oatis)
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