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Sadiq Khan fury: London Mayor takes bitter swipe at Boris Johnson over Brexit trade deal

3 min read

Brexit: UK economy ‘should come back’ following exit says expert

The London Mayor claimed the agreement signed on Christmas Eve was effectively a no deal Brexit for the lucrative sector which is largely based in the capital. He said Mr Johnson’s deal was more beneficial to European companies exporting goods to the UK than the “world-leading service sector” which is worth £132bn-a-year to the UK economy and employs more than one million people.

People who work in financial services once believed they could bank on a Conservative government

Sadiq Khan

Writing in the Financial Times, Mr Khan said: “People who work in the UK’s financial services once believed that they could bank on a Conservative government.

“But they have been well and truly abandoned by the current one at the worst possible time.”

The Mayor accused the Government of “barely paying lip-service” to the needs of the sector at the heart of the UK global competitiveness when  the deal was finally struck a week before the Brexit transition period came to an end.

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Britain and the EU are still in negotiations to thrash out a “memorandum of understanding” on future regulation of the industry with exports of UK financial services to the EU worth around £60bn-a-year.

The document will set out how firms can continue to do business across both territories.

Brussels also has to decide on the issue of so-called “equivalence” – determining if the UK’s rules and regulations are suitably compatible with its own that firms in London can have access to the EU market.

Britain has already granted the EU equivalence in 17 different areas.

But Mr Khan said: “The establishment of a solid framework to support equivalence recognitions should have been central to our negotiations.

“So far, we only have equivalence for clearing houses — a necessity for the EU side so that they can avoid disruption.”

Julian Jessop, an economics fellow at the Institute of Economic Affairs, who has previously worked for the Treasury, HSBC and Standard Chartered Bank, said the UK would thrive regardless of whether equivalence was granted.

He told Express.co.uk: “Obviously the fact there isn’t a comprehensive deal that covers financial services is a pain for the City, but it’s manageable for now, at least.

“The old system of passporting allowed British based firms to sell pretty much anything they liked into the EU without requiring any additional paperwork or approvals.

“They’ve lost that now but they can still sell services into the EU on a country-by-country basis if the regulator allows.”

Mr Jessop said the UK’s laws and regulations were far more favourable to businesses and meant Britain would remain a global finance hub.

He said: “We’re a relatively low tax economy, with far more flexibility in hiring in the labour market.

“These are advantages we had within the EU, so leaving the EU doesn’t change that, but nor does it remove them.

“I remember talking to somebody from a very well known British bank who said ‘why on Earth would anybody want to set up any sort of business in Paris? because of all the regulation you get and the high taxes.

“There are lots of advantages the UK has as a financial centre that won’t be impacted by Brexit.”

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But Mr Khan said the sector needed Mr Johnson and Chancellor Rishi Sunak to provide more certainty to the sector if it was to underpin and expand London as a global financial centre.

He said: “What we need now are political leaders to champion the growth of the financial services sector — just as Mr Johnson did when he was London’s mayor, and just as I will continue to do.

“And we need growth to be built on solid, modern foundations — exploiting new opportunities in green finance, making the most of our well-deserved reputation as the international leader in fintech and ensuring that venture capitalists continue investing in our country.”

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