EU-UK Trade and Cooperation Agreement

Lord Butler of Brockwell Excerpts

Friday 8th January 2021 Lords Chamber

[Lord Butler of Brockwell (CB) [V]]

My Lords, I address my two minutes to prospects for the financial services sector, drawing attention to my interests in the register. Many have criticised the thinness of the agreement in respect of financial services, but the surprising thing is that so few cries of alarm have been heard from practitioners themselves. In the next three months, there are to be negotiations about access. Of course, we should not expect the EU to make thing easy. Paris and, particularly, Frankfurt have long aspired to challenge London’s supremacy, and this week the Governor of the Bank of England warned that becoming a rule-taker would be too high a price to pay for equivalence. Nevertheless, I am even more confident than my old friend the noble Lord, Lord Griffiths of Fforestfach, about the prospects for this sector.

First, the UK financial services sector is innovative. It offers a complex of services, an ecosystem that, combined with the asset of the English language, is difficult to replace. Secondly, the EU would find it difficult to discriminate against the UK in this field without also cutting itself off from other markets such as the United States. Thirdly, financial services are not like goods; they are not material items that can be identified and controlled as they cross borders. In the lead-up to Brexit, fewer jobs have been moved to Europe than pessimists predicted. It may be that a greater number of financial transactions will be conducted and taxed on the continent, to the cost of the UK Exchequer, but I believe that they will still be conducted by UK-based companies. In this area, as in others, the market is likely to decide. The test will be the quality of services that our financial services sector provides, and in this I believe that we can be confident.