On Tuesday, the UK and European Union signed an long-awaited Memorandum of Understanding on Financial Services. This marks a momentous agreement after years of disagreements over post-Brexit cooperation.
Jeremy Hunt and Mairead McGuinness, the UK commissioner for EU affairs, approved the memo during the first UK chancellor’s visit to Brussels in over three years. Hunt called the move an “important turning-point,” adding that “we share objectives and collaboration is essential.”
Hunt stated that “the UK and EU financial markets are deeply connected and building a positive, voluntary relationship will benefit us both.” According to the Treasury, the UK’s financial and professional services sector is expected to be worth £275 billion ($350 million) by 2022. This represents about 12% the UK economy.
The memo was originally expected by 2021. It became stuck because first of a dispute about fishing permits, and then when the EU accused former Prime Minister Boris Johnson, of violating international law.
The agreement defines how the financial regulators will communicate regularly, and the first meeting is scheduled for autumn. The agreement does not allow companies to access markets outside their borders. This is known as equivalence. To date, the EU has only granted limited equivalence for clearinghouses. It has also pushed banks and other companies to do more business in Europe to reduce their dependence on London.