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By David Milliken and Huw Jones
LONDON, Feb 10 (Reuters) - Bank of England Governor Andrew
Bailey urged the European Union on Wednesday not to pick a fight
with Britain over its huge financial services industry after
Brexit, and said the bloc was demanding more of London than of
other trade partners.
The City of London has been largely cut off from the EU
since Jan. 1 and Brussels has said it won't be rushed into
decisions on granting access for financial firms in Britain,
saying it wants to see how far UK rules will diverge.
"This is a standard that the EU holds no other country to
and would, I suspect, not agree to be held to itself," Bailey
said in a speech to financial executives on Wednesday.
"We have an opportunity to move forward and rebuild our
economies, post-COVID, supported by our financial systems," he
said. "Now is not the time to have a regional argument."
London is the only financial centre in Europe that can
compete globally with the likes of New York, and still dominates
trading in the multi-trillion-dollar currency markets.
"London will undoubtedly continue as one of the world's
leading if not the leading financial centre," Bailey said.
Rules for the financial services industry had to adapt as the
world changes, Bailey said. But he ruled out a sudden easing of
rules in Britain after its exit from the EU, as sought by some
in the industry.
"Let me be clear, none of this means that the UK should or
will create a low-regulation, high-risk, anything-goes financial
centre and system," he said.
Britain's new trade deal with the bloc, which took effect on
Jan. 1, does not cover financial services. The City of London is
likely to get only limited "equivalence-based" access to the EU
financial market for the foreseeable future.
Bailey noted that the EU has granted long-term market access
for securities clearing houses from the United States but not
for their UK counterparts even though they comply with the same
rules.
Earlier on Wednesday, consultants PwC estimated Britain's
tax receipts from its financial services sector were set to
start falling from this year as a result of Brexit and the
impact of the coronavirus pandemic.
The 135 billion-pound industry accounts for more than 10% of
UK tax receipts.
Separately, the Centre for Economics and Business Research
said Brexit will potentially cost London's economy 9.5 billion
pounds a year.
Bailey also struck a more optimistic note, saying the
fragmentation in European markets since Britain left the EU will
likely prove temporary as "sensible forces" return to the fore.
(Reporting by Huw Jones and David Milliken
Writing by William Schomberg
Editing by Peter Graff)
