Clarity and co-operation are key to City’s future, says Jonathan Reynolds MP, Shadow City Minister & Shadow Economic Secretary to the Treasury
One of the first visits I made to the City after taking on the financial services brief was to the iconic Lloyd’s of London building in the heart of the Square Mile. Extraordinary modern architecture houses a fascinating history spanning over 300 years, from simple beginnings in Edward Lloyd’s coffee house to an insurance behemoth underwriting nearly £30bn a year. The City is replete with similar tales - long and varied trading histories which have built the foundations for its strength as an international finance hub today.
Without question, the UK’s exit from the European Union represents a major challenge to its future. However, one of the City’s main strengths is its adaptability. I have every confidence that the City can continue to share a co-operative and successful relationship with its European neighbours. But to do this, it needs an overall framework of certainty and clarity, which has so far been lacking from our Conservative Government.
In all the time the Government has failed to offer a clear outline on its negotiating plans for financial services, investment and key decisions have continued to stall among both domestic and international financial institutions of all sizes, as they lack the information they need to properly plan for the future.
This anxiety is understandable for a sector which is reliant on interconnectedness. London is a trading hub which attracts capital flows from around the globe, often relying on the mutually dependent industries within the City: insurance, law, accounting, FinTech, clearing – the list continues.
As a result, the treatment of the sector in Brexit negotiations will be key to its future. How will services be passported into the European Union post-Brexit? How can it continue to participate with the rest of Europe in building robust regulation? What transitional period will there be to avoid a cliff-edge scenario? Critically, what will be the approach to the status of EU nationals, upon whose talent the financial sector is dependent?
Post-financial crisis, the City and its European counterparts have collectively worked hard to integrate better safeguards and stability into our financial infrastructure. Simultaneously, financial markets are becoming more global, more interconnected and more automated, in many ways to the benefit of the consumer and the overall stability of the system. Brexit should not be a reason to turn back the clock on that progress, and it is essential the City can retain its internationalist outlook.