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Brexit brings a cloud of uncertainty, the Government needs to make fundamental finance decisions - Chris Leslie MP

Agnes Chambre | PoliticsHome

5 min read Partner content

Former shadow chancellor Chris Leslie speaks to PoliticsHome ahead of his debate of EU passporting.


Chris Leslie is concerned. He and a group of Labour MPs are desperate to tease out the Government’s strategy for British industrial and financial services after Brexit.

The former shadow chancellor believes that if businesses are not given assurances about whether they will be able to operate freely and successfully in Europe, within a post-Brexit Britain, companies will simply leave. But finding out the Government’s plan may not be as simple as he hopes as the Prime Minister has promised there will not be a “running commentary of Brexit negotiations”.

So he has scheduled a debate on EU passporting try and get a better idea.  

“Banks and financial companies can maybe cope with a year or two of negotiations. But if the EU doesn’t allow us to start talking about our new arrangements until after the divorce is concluded, that means we've got two years of divorce, and we then start on the negotiations which could then be another three or four years.

“Seven years of limbo will mean a lot of firms will up sticks and go.

“So I think we need to get the Government to show that they'll do these things in parallel and not one after the after.”

The Labour MP explains why this sector is so important to the economy, and why it is essential that the cloud of uncertainty surrounding Brexit is removed.

“12% of the UK's economic output is the financial services sector; bigger than most other sectors that you think of in the economy.

“It's so much more than banking - you've got insurance, accountancy, legal and much more - and it's what Britain excels at. So with this great big cloud of uncertainty that Brexit now brings, there are some pretty fundamental decisions for Britain to make.

“Are we going to keep trying to maximise export opportunities from the UK into those markets or are we going to end up in a spiral that sees the drawbridge gradually being pulled up and potentially sees the 12% share of our economy shrink back?”

As the Labour leadership is yet to schedule a debate or Urgent Question on the matter, the task has fallen to the former shadow Chancellor. He has taken on the role of seeking to hold the Government to account, because in his words, the leadership’s minds are “not on this particular issue right now”.

Speaking a few days before the debate, Mr Leslie explains that he and his “sensible Labour colleagues... can't afford to just leave it to the frontbench to figure out when this is necessary”.

“We've got a duty to hold the Government to account, as well, even if that's from the backbenches. So, I just think we've just got to get on with it - sad to say, I think we've just got to push on.

“I think these are really important questions and somebody has to ask them.”

As a Labour MP, he is in favour of strong regulation for the sector, especially after the banking crisis. An article in the Financial Times last week made him extremely worried, with Lord Lawson writing that Brexit is an opportunity for Britain to cut back and have only “light touch” regulation. Mr Leslie said he hopes No. 10 will not be influenced “by the Nigel Lawsons and John Redwoods of the world”.

“The big question is whether the Government is going to opt for equivalence or are they going to go for divergence?

“Let's not make the mistake of being a ‘tax haven style’ Britain, which might be attractive to some in the financial services sector, but will actually provoke a reaction from the rest of the EU, who will say 'you're trying to undercut us, like the Cayman Islands or something, we're not going to let you trade'.”

In the run up to this debate, Mr Leslie has talked to some of the 78 different European banks which operate in London. He believes that they need something from Britain – that they want access to the UK financial services market and that will give the UK some negotiating leverage.

“I think what we have to do is maximise that and recognise that both sides lose out if we put walls up.

“And so there's lots of eagerness from those companies. For instance, whether they will be able to operate as they do right now with branches based in the UK, or whether Britain will require them to have separately capitalised subsidiaries in the UK, which I think would cost them billions and billions.”

Something he sees as a key question is whether Britain will be able to have “free movement of skill”.

“As a minimum, we need that free movement of skills because the more barriers you put up, the more likely it is that those companies will say, ‘it's much easier to operate in Dublin or Frankfurt or Paris… why would we go through all that red tape and hassle to operate in the UK?’”

The former frontbencher believes many of these French, German and Italian companies that do a lot of trading through London will be talking to their own political leaders. He thinks that could be the key to the Brexit negotiations; companies saying to their Heads of Government “don't mess around here with any tit for tat silliness”.

“Politicians actually have an imperative on behalf of their national businesses to want to sort this out.”

Mr Leslie thinks even if he doesn’t get all the answers in his debate today, Labour MPs must push the Government to clarify some of the specifics and they must be willing to come back to it every few weeks.

“A right to sell services in other countries is quite complicated, but it's 80% of the British economy so it's actually really, really important to get right. We've got to start asking about this stuff. That's the plan."

Read the most recent article written by Agnes Chambre - Confusion among Labour's top team as senior figures disagree over second EU referendum

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