Britain Says To Sign Cooperation Pact With EU In Financial Services

Britain said on Tuesday it will sign a cooperation pact with the European Union in financial services, the latest sign of a thaw in relations since Brexit.

The memorandum of understanding on regulatory cooperation was part of Britain’s Brexit deal but put on ice due to clashes with Brussels over trading arrangements in Northern Ireland, which have now been resolved.

UK Finance Minister Jeremy Hunt, in Brussels on Tuesday to meet with European Commission officials, said UK and EU financial markets are deeply interconnected and that building a constructive, voluntary relationship is of mutual benefit to both sides.

“This agreement with our European partners as sovereign equals builds on our arrangements with the U.S., Japan and Singapore, helping to support the sector’s role as a global financial services hub,” Hunt said in a statement.

The MoU sets up a forum of treasury, commission and regulatory officials that will meet about twice a year, similar to what the EU already has with the United States.

After Britain’s financial sector lost unfettered access to the bloc due to Brexit, Brussels has made it clear the MoU won’t be a forum for negotiating better access for UK financial services.

To deepen its capital market post Brexit, the EU is approving a law that would require banks in the bloc to shift clearing of euro derivatives from London to centres like Frankfurt.

Separately on Tuesday, the bloc agreed on new rules to toughen requirements on branches of banks from Britain and other countries headquartered outside the EU.

After Brexit, London was overtaken by Amsterdam as Europe’s top share trading location as trading in euro-denominated shares shifted from the UK to the bloc, prompting Britain to reform its rules in a bid to bolster London’s role as a global financial centre.

(Reporting by Huw Jones, editing by Iain Withers and Louise Heavens)