Britain’s banks want to muscle in on Keir Starmer’s Brexit “reset” with the EU.
After years of being stuck on the sidelines, the City of London’s biggest players are pushing for financial services to finally be given a seat at the negotiating table.
“To date, financial services have not been included in the strategic UK‑EU reset,” UK Finance, a lobby group representing Britain’s lenders, said in a report out Monday. “Now is the moment for that to change.”
The effort to push financial services to the forefront of political discussions comes as U.K. Prime Minister Starmer prepares to hold a summit with European Commission President Ursula von der Leyen this summer.
Despite being one of Britain’s major industries and its economic engine, financial services has never featured on the U.K. government’s priority list — let alone near the top.
Before Britain departed from the bloc, the City had hoped for EU market access to continue in some form from London by recognizing how close the rulebooks are on either side of the English Channel.
But the U.K. financial industry was left out of the Brexit trade deal in 2020, and has been almost entirely cut off from directly serving EU clients since then.
The City found itself stuck in the political wilderness as Brussels officials refused to countenance talking about the topic amid a standoff on the Northern Ireland border.
And, while trust steadily improved both under former Conservative Prime Minister Rishi Sunak and today’s Starmer’s Labour government, the U.K. finance industry’s hopes and wishes remain stuck at a technical level in discussion forums overseen by officials.
Britain’s banks want more than that.
In its report, UK Finance called for a “genuinely strategic” partnership between the two sides on financial services and set out a roadmap to give politicians a vision of how to get there.
A decade on from the Brexit referendum, the banking lobby said the dismal economic backdrop should make the case to remove frictions and improve relations for an industry that can drive investment and jumpstart growth.
“We believe that both sides can achieve better outcomes for the financial services industry, but also for the economies and the customers and clients that both industries on both sides serve,” said Kerstin Mathias, director of international affairs at UK Finance.
The report suggests immediate steps like extending EU market access indefinitely for the U.K.’s clearinghouses — previously a major Brexit sore spot — and setting up technical working groups to coordinate on rules, rather than just chat about them.
The lobby group also calls for a “pragmatic” decision to recognize U.K. banks as “equivalent” to their EU counterparts on capital rules — arguing it would free up capital on the EU side.
And, on the bigger picture, UK Finance backs a bilateral treaty based on mutual recognition of the rulebook to allow for more cross-border trade in services.
It also suggests a pan-European effort to integrate capital markets and drive more investment into languishing economies.
Britain’s banks hope there is “genuine momentum to act” and put financial services on the agenda ahead of the U.K.-EU summit, slated for July.
But the summit comes at a bad time for Starmer, whose future as prime minister is now in doubt — and Britain’s political chaos once again threatens to derail the entire “reset” agenda.
Plus, the EU hasn’t shown any signs it would be willing to open up more to the U.K. on financial services.
Unfortunately for the City, the politics may have shifted once again.