BRUSSELS: The European Union (EU) took a significant step on Wednesday toward finalizing a delayed agreement with the United Kingdom (UK) on financial services cooperation, marking progress in the ongoing efforts to improve relations between the two sides.
In March 2021, Brussels and London reached an agreement known as a memorandum of understanding on financial services regulation. However, it was never signed due to the strained relationship caused by disputes over the Northern Irish trade rules.
Fortunately, with the resolution of the Northern Irish trade issue through the adoption of the “Windsor Framework” post-Brexit trade deal in March this year, the way has been paved for further cooperation.
London, being a major global financial hub, has been particularly eager to establish a financial services agreement with the EU. On Wednesday, the European Commission, the executive branch of the EU, took the initial step by adopting a draft agreement, which will now require approval from the EU’s 27 member states.
The deal is expected to be presented for signing at the next meeting of the bloc’s finance ministers scheduled for June. It is important to note that the agreement does not cover the access of UK-based companies to the EU single market or vice versa.
Positive Development for UK
The completion of this agreement will be seen as a positive development for Britain, indicating that the country is moving in the right direction in its relationship with its largest trading partner post-Brexit, despite the previous contentious disputes.
Chris Hayward, the policy chairman for the City of London corporation, which oversees London’s financial district, welcomed the news as “good news,” expressing optimism for renewed conversations with Europe. Hayward emphasized the significance of constructive dialogue that leads to action.
Once signed by both parties, the agreement will establish a framework for voluntary regulatory cooperation in the field of financial services between the EU and the UK. It will also establish a Joint EU-UK Financial Regulatory Forum, providing a platform for regulators from both sides to discuss matters pertaining to financial services.
Mairead McGuinness, the EU’s financial services commissioner, stated, “The Windsor Framework allowed the EU and the UK to open a new chapter in our partnership based on a spirit of mutual trust and cooperation.” She expressed confidence that the future engagement in financial services will be built upon shared commitments to financial stability, market integrity, and consumer and investor protection.
