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Thu, 3 December 2020

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Rishi Sunak Has Tried To Reassure The UK Financial Sector Weeks Before The Brexit Transition Period Ends

Rishi Sunak Has Tried To Reassure The UK Financial Sector Weeks Before The Brexit Transition Period Ends
3 min read

Chancellor Rishi Sunak has sought to reassure the UK's financial services sector it has a safe future after the Brexit transition period by rolling out low carbon bonds and embracing "stablecoin" cryptocurrencies.

In a statement to the House of Commons, the Chancellor said the Treasury would issue sovereign green bonds in 2021. These are typically used by governments to finance environmental projects that tackle climate change and create green jobs.

The statement comes after it was widely reported over the weekend that the government is hoping to build bridges with president-elect Joe Biden over the environment. Boris Johnson told a press conference shortly after Sunak's announcement: "We're seeing the US really willing to take a lead too on climate change which is great news."

Striking a buoyant tone Sunak said there would be a "new chapter" for the financial services industry that would be more open, techonologically advanced and greener. The Financial Services Bill will be debated in the Commons later today.

Sunak said he would shortly publish a consultation on new forms of privately issued currencies, known as stablecoins, and ensure they meet the same high standards as other payment methods. The Bank of England and Treasury are also considering if central banks can issue their own digital currencies as a compliment to cash, he said.  

In his statement Sunak laid out plans to introduce environmental disclosure standards so investors and businesses can understand the financial impacts of their exposure to climate change.

With just weeks to go until Britain leaves the Brexit transition period and against an economy severely impacted by coronavirus, Sunak said he had been forced into taking unilateral decisions on financial regulation, also known as equivalence, because the EU has not indicated the type of relationship it would like to have with UK after December 31."Of course we will always want a constructive and engaged relationship with the European Union but after four years I think it is time to move forwards as a country and do what's right for the UK," Sunak said. 

Equivalence decisions will be published today by Sunak for EU and EEA member states, and he said this would give certainty for the sector.

"We will use equivalence when it is in the UK's economic interest to do so, taking a technical, outcomes based approach, that prioritises stability, openess and transparency," he said. 

Shadow chancellor Anneliese Dodds responded by saying that the fact the UK has not managed to reach an agreement on equivalence is a significant problem ahead of Brexit.

"With weeks to go until we leave the transition period, we still don't know whether the EU will determine that our rules are equivalent to theirs. The deadline of achieving equivalence was June of this year," she said.

The Labour politician said of the 28 forms the UK needed to complete on equivalence rules it had only filled in four.

"This government can't even complete the paperwork on time to secure market access for our largest export industries," she said. "[Equivalence] should have been done months ago."

Citing research from Ernst & Young she said 7,000 jobs have already gone from the sector and £1.3 trillion in assets could be relocated from the UK. 

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