How is the UK government seeking ideas for its EU financial deal?

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UK Government Seeks Financial Deal Ideas Directly From Banks

The British government is actively soliciting proposals for its financial services trade deal with the European Union by engaging directly with major global banks, such as Citi and Goldman Sachs. This shift in strategy bypasses traditional industry lobby groups, reflecting a change in approach following the rejection of previous proposals by Brussels. The finance ministry has indicated an ongoing dialogue with financial firms, aiming to incorporate practical ideas into future trade relations, particularly concerning an improved equivalence system.
Direct Engagement with Financial Institutions

Following the unsuccessful attempt to establish a "mutual recognition" system last year, large banks have begun to independently develop ideas for improving market access to the EU. This direct engagement with institutions like Citi and Goldman Sachs allows the government to gather specific, actionable proposals. This contrasts with the previous year's effort where a united front of asset managers, insurers, and banks presented a broader, less detailed plan.
Focus on Equivalence System Improvements

The current strategy centres on enhancing the EU's existing equivalence system, which grants market access based on the alignment of a foreign bank's regulatory framework with EU standards. Banks are working with consultants to identify practical ways to make this system more predictable and workable, as determinations can be made without a set timetable and withdrawn on short notice. The finance ministry's "white paper" on future EU trade relations also mentioned pursuing an improved version of this equivalence framework.
Divergent Industry Priorities Complicate Approach

The financial sector itself exhibits a range of priorities, complicating the development of a unified trade proposal. Wholesale banks favour alignment with EU rules to prevent regulatory duplication, even if it means becoming "rule takers." Conversely, insurers are seeking divergence from certain EU regulations, such as Solvency II, to avoid being subject to rules they wish to move away from. Retail banks find themselves in a middle ground, seeking some regulatory adjustments.
Past Setbacks Temper Industry Expectations

Previous experiences, particularly the rejection of the mutual recognition blueprint, have tempered industry expectations regarding the speed and scope of any potential trade deal. The EU remains the UK's largest customer for financial services, with significant annual exports. However, the EU's equivalence determinations lack a fixed timeline, do not cover all financial activities, and can be revoked with little notice, leading bankers to seek greater predictability in the process.

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How is the UK government seeking ideas for its EU financial deal?

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