UK Finance publishes plan for EU financial services relations

Ten years after the Brexit referendum, UK Finance, in partnership with Freshfields, has launched a report outlining its vision for the UK and EU relationship in financial services.

Unlocking Growth Through a Stronger UK-EU Financial Services Partnership calls on the EU and the UK to place financial services on the agenda for the upcoming Leaders’ Summit and place it within the political reset to build a more strategic financial services relationship. The UK’s financial services sector is a critical enabler of growth, investment and economic resilience for businesses and consumers across the UK and the EU.

The report draws on targeted research, interviews with a broad range of stakeholders, including banks from the UK, EU and wider world, embassy representatives, think tanks and trade associations. It sets out a vision for a strategic partnership, with a three-stage roadmap starting with practical steps that are achievable now and are essential to unlocking more ambitious outcomes in the future.

The short-term priorities for the next two years focus on immediate changes that will reinforce UK-EU financial services cooperation:

• Maximise UK-EU Memorandum of Understanding: Shift the joint Regulatory Forum from passive information sharing to active coordination on new financial services initiatives.
• Embed financial services at the UK-EU Summit: Make the sector a standing, strategic agenda item to drive structured cooperation at annual UK-EU summits.
• Secure long-term certainty: Deliver non-time-limited Central Counterparties (CCP) equivalence and remove the sunset clause from the EU’s UK data adequacy decision.

The medium-term priorities for the next four years focus on structural changes that address regulatory inconsistencies and remove barriers to meeting Europe’s financial needs:

• Unlock services mobility: Create a UK-EU mobility agreement for skilled professionals, modelled on the UK-Swiss SMA.
• Address Capital Requirements Regulation (CRR) gap: The absence of an EU equivalence decision creates avoidable costs and operational friction for firms on both sides.
• Advance targeted collaboration: Approach equivalence pragmatically, focussing on targeted and technical decisions and pilot joint innovation through a UK-EU ‘competitiveness lab’ and regulatory sandbox.

The longer-term priorities build on the earlier-stage proposals and help shape what could be achieved in the years ahead:

• A UK-EU Financial Services Agreement: A future treaty, inspired by the UK-Switzerland Berne Financial Services Agreement, offering a stable long-run framework.
• Pan-European Capital Markets Union: A long-range ambition for a deeply integrated capital market across the UK, EU, European Economic Area and European Free Trade Association.

Kerstin Mathias, Director of International Affairs at UK Finance, said “The UK and EU have a well-connected financial landscape, but our institutional relationship sits below its potential. The past decade has brought significant change, and with it an opportunity to enhance how the UK and the EU engage on financial services.

“This is not a call for reintegration into the Single Market – the EU is a sophisticated bloc pursuing its own ambitious agenda and the UK, likewise, has its own regulatory framework, policy priorities and global commitments. But the two highly connected economies can achieve more where we cooperate. The question is not whether to work together, but how to do so more effectively.”

Emma Rachmaninov, Freshfields partner, said “The UK and EU share many of the same goals and a commitment to the same international standards. In that context, we’ve been delighted to work with UK Finance to consider how a phased pathway could lead towards increased UK-EU collaboration in financial services – building the foundation now and deepening the cooperation over time in areas that are of clear mutual benefit, whilst respecting the boundaries and sovereignty of both parties.”

Marsha de Cordova MP, Co-Chair of the UK-EU Parliamentary Partnership Assembly, said “The UK and EU share a strong economic partnership, and closer cooperation in financial services can help drive growth and unlock potential on both sides. This report makes an important contribution to that discussion, highlighting how deeper collaboration can deliver real benefits for business and our wider economies.”