Ten years on from the Brexit vote, UK Finance has released a detailed report in partnership with law firm Freshfields, proposing a fresh strategic approach to ties between Britain and the European Union in the financial sector. Titled Unlocking Growth Through a Stronger UK-EU Financial Services Partnership, the update from UK Finance now urges both sides to prioritize the industry at the forthcoming leaders’ summit and integrate it into broader efforts to reset political relations.
The UK’s financial services industry serves as a driver of economic expansion, cross-border investment, and stability for companies and households throughout the UK and EU.
The report, informed by in-depth research and discussions with diverse stakeholders—including British, European, and international banks, diplomatic officials, policy experts, and industry groups—advocates building a more purposeful partnership that respects each side’s autonomy while delivering shared benefits.
At its core is a phased three-stage plan designed to begin with feasible, immediate actions that lay the groundwork for progressively deeper integration over time.
In the short term, over the next two years, the focus should be on practical enhancements to existing frameworks.
This includes fully leveraging the UK-EU Memorandum of Understanding by transforming the joint Regulatory Forum from a forum for basic updates into a platform for proactive alignment on emerging rules and initiatives.
Financial services should also become a regular, high-level topic at annual UK-EU summits to ensure consistent high-level engagement.
Additionally, both parties need to provide lasting stability through permanent equivalence decisions for UK central counterparties (CCPs) and by eliminating the expiry clause on the EU’s data adequacy ruling for the UK.
Looking further ahead, over the next four years, structural reforms would tackle regulatory mismatches and reduce unnecessary obstacles to serving Europe’s financing requirements.
Key proposals include negotiating a dedicated mobility pact for financial professionals, drawing inspiration from the UK-Switzerland arrangement, to ease the movement of skilled talent.
Authorities should also resolve the gap in the EU’s Capital Requirements Regulation by granting equivalence, which would cut compliance burdens and operational hurdles for firms operating across borders.
Collaboration could be expanded through pragmatic, issue-specific equivalence assessments, alongside experimental joint projects such as a “competitiveness laboratory” and shared regulatory sandboxes to foster innovation.
In the longer term, the vision extends to more formal arrangements, potentially including a comprehensive UK-EU Financial Services Agreement modelled on the UK-Switzerland Berne framework.
An even bolder aspiration involves contributing to a truly integrated pan-European capital markets framework spanning the UK, EU member states, the European Economic Area, and European Free Trade Association countries.
Kerstin Mathias, UK Finance’s Director of International Affairs, highlighted that while the UK and EU maintain closely linked financial ecosystems, their formal ties have yet to reach full potential.
She emphasized that neither side seeks a return to single market arrangements, but both can gain significantly from smarter cooperation that aligns with their respective goals and global obligations.
Emma Rachmaninov, a partner at Freshfields, noted the common objectives and adherence to international standards shared by both jurisdictions.
The phased approach aims to strengthen foundations today while gradually expanding mutually advantageous cooperation without compromising sovereignty.
Marsha de Cordova MP, Co-Chair of the UK-EU Parliamentary Partnership Assembly, acknowledged the report’s emphasis on how enhanced partnership could stimulate growth and deliver tangible advantages for businesses and economies on both sides. As Europe navigates various economic challenges, this roadmap offers a pragmatic pathway to harness the strengths of interconnected global financial markets.
