UK Chancellor Jeremy Hunt expects to sign a Memorandum of Understanding on financial services, setting out plans for UK/EU cooperation.

The chancellor is visiting EU Commissioner Mairead McGuinness, responsible for financial services, financial stability and capital markets union.

The Memorandum of Understanding signifies an important step in UK/EU relations post-Brexit. The UK, as a leading global hub of financial services managed around £11trn of assets in 2020. Around 44% of this is managed on behalf of international investors including the EU.

The agreement establishes a forum for the UK and EU to discuss voluntary regulatory cooperation on financial services issues. Both sides will share information, work together towards meeting joint challenges. And coordinate positions where appropriate on issues ahead of G7, G20 and other international meetings.

The UK and the EU committed to the Memorandum of Understanding alongside the Trade and Cooperation Agreement. This complements regulatory cooperation arrangements the UK already has with major financial sector partners including the US, Japan and Singapore.

Hunt said: “The UK and EU’s financial markets are deeply interconnected. Building a constructive, voluntary relationship is of mutual benefit to us both.

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“In the UK, our financial services sector is a true British success story. Together with the related professional services sector it was worth £275bn last year, making up an estimated 12% of the British economy.

Industry reaction

Laimonas Noreika, CEO, HeavyFinance told RBI: “Enabling greater economic cooperation between with UK and the EU is critical for driving growth, tackling surging inflation and addressing the climate change emergency. In a challenging economic climate, businesses across these markets need access to crucial financial support and investment to hire fresh talent, reduce their emissions and develop a cleaner, leaner working model.

“This simply cannot be achieved without the financial systems in place to enable a regular flow of funding. This agreement is a step in the right direction to further expanding international collaboration in the financial services industry. It will play a vital role in helping businesses transform for the better.”

Fintech entrepreneur Khalid Talukder, co-founder of DKK Partners added: “The UK’s financial services industry is a major driver of growth and building stronger links with the EU is in our national and economic interest. This agreement is another major step forward in develop a blueprint for a truly prosperous post-Brexit Britain, that has strong links with the substantial EU marketplace. But also has the ability to trade internationally in other parts of the world.

“In the face of stubborn inflation and rising interest rates, giving businesses a trade boost should be a top priority for the government this year and beyond.”