Philip Hammond prepares Brexit ‘no-deal’ plans for Britain’s banks and vows London WILL stay as banking capital
Ministers are preparing a draft finance bill which will allow EU banks to continue to operate in the UK after Brexit
PHILIP Hammond is drawing up no-deal plans for Britain's banking sector to continue to boom after Brexit.
Ministers are preparing a draft finance bill - "if necessary" - to give bodies extra powers to make sure European banks can stay in Britain after we leave the bloc.
Under plans released today, European banks won't need to go through the lengthy and complicated process of setting up official offices in Britain.
Banks offering money and services to each other and businesses are to operate under the same rules - even if we don't get a deal with Brussels.
Currently banks anywhere in the EU can sell their services to anywhere else in the bloc thanks to rules known as a financial services passport.
Philip Hammond said today that no-deal was "unlikely". He added: "I am confident that we will agree a deep and special partnership for the future with the EU27 and that we will soon finalise the terms of an implementation period that will provide continuity as we move to that new partnership."
He went on: "The measures announced by the Bank of England and the Financial Conduct Authority (FCA) today will ensure that the UK's exit from the EU is smooth and orderly, will underpin the UK’s status as a global financial services sector and will ensure that UK consumers are protected."
And Theresa May stressed this afternoon that "the City of London is obviously important to us in the UK but actually it is of significant importance to the UK as well."
The FCA said today that "it is anticipated to mean that firms will be able to continue to benefit from passporting between the UK and EEA after the point of exit and during the implementation period."
Ministers are trying to include financial services in a deal with the EU, but Michel Barnier has insisted that it is not possible.
Yesterday the EU chief negotiator sparked a row over banking by saying that there was "not a single trade agreement that is open to financial services" and we would have to strike a new deal with the bloc after we leave.
But Theresa May hit back, insisting that we CAN have a special Brexit deal to protect our booming banking sector.
The Prime Minister's Official Spokesperson said that although cabinet did not discuss Mr Barnier's words: "As we’ve said throughout, we’re confident of negotiation a deep and special economic partnership that will include a good deal for financial services.
"As we’ve always been clear that will be in the EU’s best interests as well as ours."
And lobby group TheCityUK insisted: ";Just because financial services have not been encompassed in free trade agreements to date is no reason to dismiss them from a future UK/EU free trade agreement".
Bank of England Governor Mark Carney also weighed in today, saying that ruling out a deal would be "taking away from progress".
And he said that London remains the "banker for Europe" in a number of ways.
"My understanding of the process is the negotiating mandate is set by the European Council, not by the Commission," he told MPs on the Treasury Select Committee - slapping down Mr Barnier's authority to speak on the matter.
And today's banking news will be a relief to City chiefs after it was reported today that the EU will demand tough rules for them in order to keep access to European markets after Brexit.
In new laws being proposed in Brussels, the EU will demand we stick closely to their rules in order to stay trading in financial services.
Britain is home to around half of the EU's investment companies - which will in future have to abide by "equivalent" EU regulations.
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The Commission wants to make it even harder for countries outside of the bloc to have the same level of access to their markets.
The draft legislation, seen by the Financial Times will have to be approved by other EU states, says that there is a need to "update the regulatory architecture in the EU".
this means the UK would need to stay in harmony with EU rules to benefits from the access - including limits on bankers pay and bonuses.
Bank of England Governor Mark Carney has suggested that the cap on bankers bonuses - which limits them to no more than twice fixed salary - could be removed after Brexit.