Dominic Raab dismisses EU threat to City of London

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An analysis by EY (formerly Ernst and Young) found the City of London will retain its status as the financial capital of Europe despite Brexit, taking into account various factors including investment and economic growth. On investment, the leading City accountancy giant said Foreign Direct Investment (FDI) in finance was still ahead of European rivals.

Figures from the firm showed foreign companies invested in 56 financial services projects in the UK last year, seven ahead of closest rivals France.

For the UK, the majority of investment came from the United States, accounting for 37 percent of UK financial investment, up from 32 percent in 2020.

The report also revealed investor sentiment on the future of the City of London financial services was “positive” after the UK left the EU.

It suggested Chancellor Rishi Sunak’s economic recovery plan from COVID-19 was also the most investment-friendly.

Anna Anthony, UK financial services managing partner at EY said the UK was “looking to a strong future and will continue to outperform the rest of Europe.”

The report has been welcomed by the UK Government who said it should be a “wake up call” for Brussels to agree on a financial services deal.

London and Brussels have agreed to start a dialogue via an informal forum for discussing financial rules following the agreement of a memorandum of understanding.

But the understanding, which could bring forward an equivalence agreement with Brussels for UK financial markets, has yet to be approved by the bloc’s member states.

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A UK Government source added: “This helps to show there is business confidence that Britain is the European finance powerhouse.

“This is a sure wake up for Brussels who appear to be ignorant on this issue, we need to start talks on an equivalence deal now.”

Katharine Braddick, director of financial services at the Treasury, said she hoped the approval of the memorandum of understanding would be approved by the EU’s 27 members quickly.

She added: “Once that memorandum of understanding is agreed we can get on with establishing our routine ways of engaging.”

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The Treasury chief stressed the understanding was critical in a bid to mend bridges with Brussels following tense row’s over the Northern Ireland protocol.

The understanding, she concluded, would put Britain’s EU relationship on a “reliable, transparent and understandable footing” to give business certainty.

But John Berrigan, head of the European Commission’s financial services unit, said the EU remains open to the rest of the world.

He added: “This is not about disengaging.”

An EU Commission spokesperson said work on approving the forum was ongoing.

It comes after the Brexit deal cost London its status as Europe’s top share trading centre to the Netherlands, according to economic data.

These figures caused concern amongst UK officials other EU localisation rules will draw more business away.

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