The UK financial services industry continues to enjoy a surge in exports, of which 45% are directed to the EU.
The value of financial services exported surged to €67bn (£59,6) in 2017, an increase of just over €4bn, the Office for National Statistics reported on Tuesday. Among the UK’s trading partners, the EU accounted for just under €30bn (£25,9bn), an increase of just under €2bn.
The chief lobbyist for UK Finance, Stephen Jones, told Reuters that it was in the best interest of both the UK and the EU to maintain cross-border flows of capital.
The UK government has made clear it is not seeking Single Market access for its financial services and will instead pursue a regime based on “equivalence.” This will mean that the UK service sector will seek “third country” access, of the kind granted to Japanese and US-based firms.
This dramatic regime change means that many UK firms will not be able to service customers in the EU from the UK and are opening subsidiaries in the EU.
Insurers and a number of law firms seem to favour Dublin; some lenders and clearinghouses are moving to Frankfurt. Paris, Luxembourg and Amsterdam have also benefitted.
The UK wants to see a deepening of “equivalence” regimes, in which the EU recognizes the services offered by a third country as meeting EU standards. From the moment Paris moved to inherit the European Banking Authority from London, maintaining a limited “equivalence” regime has become key to gaining market share in the financial sector industry.