“It is my priority as Chancellor to ensure that the UK remains the financial services centre of the world. And the global hub of fintech.” These were the words of UK finance minister Philip Hammond during yesterday’s inaugural UK Finance Annual Dinner.
In this regard, Hammond said the UK has what it takes to succeed: the timezone, the language, the legal system, the talent, the capital markets, the tech centre, plus a government determined to create the necessary regulatory and tax environment.
The official added that it has to be a collaborative effort between the government and the private sector. Citing the importance of private investment, Hammond said it is businesses in attendance during the event “that have built the world’s pre-eminent financial centre”.
Hammond said there are around £7 trillion of assets under management in the UK’s financial services industry. He added that 60% of European capital market business is conducted through the UK.
In terms of challenges and concerns, Hammond discussed the issue of Britain’s departure from the European Union. He recognised that it is a major worry for businesses.
Highlighting the UK’s negotiating position with the EU, Hammond stressed the importance of a smooth and orderly exit; of preserving reciprocal access to each other’s markets for goods and services; and of getting the future financial services relationship right.
“A fragmentation of European financial service markets would result in poorer quality, higher priced services for business and citizens across Europe. It would result in business being lost to New York and Hong Kong,” he claimed.
Hammond continued: “It would push up fixed-rate borrowing costs for homeowners across the continent. It would push up costs for airlines hedging against fuel prices… or farmers protecting themselves from foreign exchange risk when exporting their produce.”
According to the finance minister, no existing trade agreement nor third-country access to the EU supports the scale of reciprocal trade in financial services that exists between the UK and the EU.
“So we want to protect our existing trading relationships with the EU. But we also want to ensure that the future trade arrangements we have with the EU work. And that is particularly important for financial services,” stressed Hammond.
However, he made it clear that the UK will not accept “protectionist agendas, disguised as arguments about financial stability”. Instead, the UK will make “forward-leaning” proposals for greater transparency, cooperation, and agreed standards based on international norms.
“Domestically we will continue to have the most robust regulatory and supervisory regime – to protect our taxpayers from having to step in to deal with failure,” said Hammond. “Whatever the outcome of the negotiations, we must ensure that firms are able to operate within a workable regime at the point of exit and beyond.”
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