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Next Steps for Financial Services

Theresa May’s Brexit speech this week set out her vision. It confirmed what has been obvious from the start: the referendum result means that the UK is leaving the EU.

The aim now – in the words of Article 50 – is to reach an agreement on the arrangements for the UK’s withdrawal, ‘taking account of the framework for its future relationship with the EU’. Attention must be turned to what the UK is seeking.

Financial services and the City’s future will be one of the areas for discussion. This will require simple but subtle thinking for the optimum execution.

The principles for negotiation have become clear as the EU and the City both recognise the huge gains from getting things right. City UK and the Financial Times have thrown their weight behind negotiating on the basis of mutual recognition of equivalent laws in the EU and UK to govern the sector.

The next steps would be to make equivalence better, to identify the relevant businesses and to prepare the UK’s home pitch for the new regime post Brexit. These are discussed more fully in the featured article this week What Next? The Shape of the UK-EU Financial Services Deal.

The outcome of the Brexit negotiations could be optimal for both the EU and the UK. Free of the British thorn in its side, the EU can integrate further and focus on the development of a single market in accordance with its social policies and principles. The UK, free of the EU’s more protectionist instincts, can focus on developing itself as an attractive financial centre, with sensible, free-market regulatory policies, carefully calibrated to minimise systemic risk, maximise free and transparent markets, and guarantee consumer protections.

The prize, for everyone, is obvious. Achieving it is within our grasp.


Barnabas Reynolds

Barnabas Reynolds is a partner at Shearman & Sterling LLP and Global Head of the Financial Services Industry Group. He is the author of Restoring UK Law: Freeing the UK’s Global Financial Market, (2021), The Lawyers Advise: UK-EU Trade and Cooperation Agreement – Unfinished Business? (2021), and Politeia’s new publication, Rules for the Regulators: Regulating Financial Services after Brexit.

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