UK and EU reach post-Brexit ‘turning point’ with financial services deal – Hunt

Horizon membership talks ‘not stalled ... just crunchy’ says chancellor

Britain and the European Union have signed a deal on financial services regulation, in the latest sign of a post-Brexit thaw in relations, although Jeremy Hunt admitted that talks on rejoining the Horizon Europe science programme were at a “crunchy” stage.

EU financial services commissioner Mairead McGuinness said Brussels and London had “turned a page” in their relationship.

Financial services makes up more than a tenth of the British economy, being worth more than a quarter of a trillion pounds last year.

A memorandum of understanding (MoU) signed by Ms McGuinness and the chancellor will see greater cooperation between officials from the EU and the Treasury.

She said the Windsor Framework deal to address concerns over Northern Ireland had helped smooth relations between the UK and EU.

“This has allowed us to move forward in a spirit of partnership, based on trust, cooperation and delivering benefits for people on both sides. This MoU we’ve just signed is one example of the benefits of partnership.”

The new deal allows officials to discuss regulatory changes, international developments and risks to financial markets. It will also allow both sides to coordinate positions ahead of G7, G20 and other summits.

Mr Hunt said it was an “important turning point” and “not the end of a process but the beginning”.

However, EU officials stressed the memorandum would not restore access to the single market or prejudge decisions on equivalence, where one side recognises the other’s regulations.

Mr Hunt’s visit to Brussels on Tuesday was the first by a chancellor in more than three years, despite the central importance of the Square Mile to both the UK’s economy and European financial services.

Around £11 trillion of assets were managed in the UK in 2020, just under half (44 per cent) of which was on behalf of international investors, including those from the EU.

Chris Cummings, chief executive of the Investment Association, said: “The signing of the MoU on financial services is an important milestone.

“A close partnership between the UK and EU, which recognises the long-shared history of cooperation, is of mutual benefit and will mean a more resilient and dynamic investment management sector across Europe that benefits citizens and businesses wherever they may be located.”

Meanwhile, Mr Hunt said talks on Britain participating in the Horizon Europe science programme have not stalled but are stuck on financial details.

He said the “optimal outcome” would be to find a way for participation in the programme to “work for the UK”.

Asked about the negotiations, he replied: “I wouldn’t describe them as stalled. I think that they are becoming more crunchy as we start to work out precisely what terms for participation in Horizon would be fair to UK taxpayers and work for the UK.

“But I think both sides recognise that it is a successful and very important programme and the optimal outcome will be to find a way where participation can work for the UK.”

Horizon Europe is a collaboration involving Europe’s leading research institutes and technology companies.

Britain was set for membership of the programme as part of the Brexit trade deal but that was scuppered by disputes over the Northern Ireland Protocol.

Those have now been resolved through the Windsor Framework and European Commission president Ursula von der Leyen opened the door to Rishi Sunak to join the scheme.