The UK and European Union have signed a co-operation agreement over financial services which has been welcomed by the London insurance market.
Chancellor Jeremy Hunt used his first trip to Brussels in his role as an opportunity to sign an agreement on financial services cooperation with commissioner Mairead McGuinness, which will help to establish, what has been described as a “constructive, mutually beneficial relationship between the UK and the EU in financial services”.
The deal has been welcomed in the London insurance market which has been affected by the UK’s decision to leave the European Union and with it the withdrawal of passporting rights which allowed UK based insurers and brokers operate across the EU single market.
This comes as the Chancellor is in Brussels for a series of meetings with European Commissioners, in the first visit from a UK Chancellor in over three years. He added that the trip will be used to wider discuss UK/EU cooperation with his counterparts at the European Commission.
While in Brussels Hunt will also be meeting with Valdis Dombrovskis (European Commission executive vice-president responsible for an Economy that Works for People, also in charge of Trade) and Margrethe Vestager (European Commission executive vice-president for ‘A Europe Fit for the Digital Age and Competition). He will discuss the UK’s competitiveness and growth, the EU’s Green Deal Industrial Plan and economic security.
Commissioner McGuinness is the European Commissioner for financial services, financial stability and capital markets union.
The UK Treasury described the Memorandum of Understanding as signifying an important step in UK/EU relations post-Brexit. Hunt said the UK is a leading global hub of financial services, of the £11 trillion of assets managed in the UK in 2020, around 44 per cent is on behalf of international investors including the EU.
The agreement will establish an ongoing forum for the UK and the EU to discuss voluntary regulatory cooperation on financial services issues. Both sides will share information, work together towards meeting joint challenges and coordinate positions where appropriate on issues ahead of G7, G20 and other international meetings.
The UK and the EU committed to the Memorandum of Understanding alongside the Trade and Cooperation Agreement. It adds to the growing number of regulatory cooperation arrangements the UK already has with major financial sector partners including the U.S., Japan and Singapore.
Hunt explained: “The UK and EU’s financial markets are deeply interconnected and building a constructive, voluntary relationship is of mutual benefit to us both.
“In the UK, our financial services sector is a true British success story. Together with the related professional services sector it was worth £275 billion last year, making up an estimated 12 per cent of the British economy.
“This agreement with our European partners as sovereign equals builds on our arrangements with the US, Japan and Singapore, helping to support the sector’s role as a global financial services hub.”