Philip Hammond warns EU that financial services deal 'in both our interests' after Brexit

Posted On: 
6th March 2018

Philip Hammond will today warn the EU that it will be harming its own economy if it does not include financial services in any post-Brexit free trade deal with the UK.

Philip Hammond arriving for yesterday's Cabinet meeting.
PA Images

In a major speech, the Chancellor will hit out at the "sceptics" who believe such an agreement is impossible because it has never been done before.

He will point to trade deals the EU wanted to strike with America and Canada, which would have included close financial co-operation, as proof that it can be done.

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The Government is eager that Brexit does not do too much damage to the financial services industry, which is vital to the wider UK economy.

Speaking in London, Mr Hammond - whose strong pro-Remain views have made him a hate figure to many Tory Brexiteers - will say: "It is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before.

"To them I say every trade deal the EU has ever done has been unique. The EU has never negotiated the same arrangement twice. It has bespoke relationships with Turkey, Canada, Singapore, South Korea, Switzerland.

A trade deal between the UK and the EU must start from the reality of today - that our economies, including in financial services, are interconnected; that our regulatory frameworks are identical; and that our businesses and citizens depend on cross-border financial services trade in their day-to-day lives when they buy a car, or take out a fixed rate loan, or hedge their fuel costs."

He will say that the proposed Transatlantic Trade and Investment Partnership (TTIP) with American, and the EU-Canada Comprehensive Economic and Trade Agreement (CETA) showed that agreement was possible.

"Both CETA and TTIP were intended to promote convergence between entirely separate markets with different rules and low levels of interconnectedness," he will say.

"We can do so much better. We have demonstrated how we can work together over the past decade as we have repaired and defended the financial stability of our continent," Mr Hammond will say.

"If it could be done with Canada or the USA, it could be done with the UK – the EU’s closest financial services partner by far.

 "So I am clear not only that it is possible to include Financial Services within a Trade Deal but that it is very much in our mutual interest to do so."

The Chancellor's intervention is the latest in a series of Brexit speeches by senior Cabinet ministers.

They come ahead of a crucial EU Council meeting later this month, at which British and European negotiators hope to strike an agreement on the terms of a two-year post-Brexit transitional deal.