Philip Hammond, the chancellor, and David Davis, the Brexit minister, have promised financial services chiefs a “smooth and orderly transition” when Britain leaves the EU, as pressure rises for an interim deal to ease the exit.
Mark Carney, Bank of England governor, repeated his view it was “absolutely desirable” for financial services groups to be given time to adjust and “restructure after the deal is agreed with the EU”.
That message was reinforced by 10 leading City figures who met Mr Hammond and Mr Davis yesterday for talks spanning 90 minutes, including discussion of a post-Brexit deal to allow trading rules to continue for a limited period.
Mr Davis, who has expressed scepticism of such a deal, was said by one participant to be “not dismissive” of the idea. It was the first time he had jointly attended talks with financial services chiefs with Mr Hammond.
“A transitional deal would be in the interests of Britain and the EU and necessary for the financial stability of both,” said one participant at the meeting. “It’s just that nobody is prepared to say that publicly at the moment.
The meeting, at the Warwick Business School in the Shard, London Bridge, involved executives of companies including Lloyd’s of London, Barclays, Santander, BlackRock, Goldman Sachs and the Association of British Insurers.
Mr Hammond and Mr Davis also discussed options for a regime to give the City access to the European single market after Brexit, including one based on regulatory equivalence between Britain and the rest of the EU. In that model, financial services companies would be granted third-party passports to operate across the EU based on the principle of equivalence, instead of the passports currently issued because Britain is in the single market.
Mr Carney repeated his view that an interim deal should cover the period between Brexit – due by March 2019 – and the introduction of new trading arrangements. “What I would say is that it’s desirable,” he told Channel 4 News.
New figures meanwhile showed the annual tax contribution of financial services has hit a record high of £71.4bn, up 7.4 per cent in the year to April. The contribution of the sector to total tax receipts rose from 11 per cent to 11.5 per cent in the last fiscal year.
That is still below where it was before the financial crisis, when strong profits took its share of the overall tax take to 13.9 per cent in 2007.
