Bank of England boss launches broadside at EU over finance industry rules

Bank of England governor Andrew Bailey fired a warning shot at the EU last night as he reaffirmed that the UK will not become a ‘rule-taker’.

Mr Bailey said the bloc was trying to hold Britain to standards that it would ‘not agree to be held to itself’.

Delivering his annual speech to the City of London, held online rather than at the Lord Mayor’s stately Mansion House, he added that forcing the UK to blindly accept EU rules would be ‘unrealistic, dangerous and inconsistent with practice’. 

Bank of England governor Andrew Bailey (pictured) fired a warning shot at the EU last night as he reaffirmed that the UK will not become a ‘rule-taker’

His caution comes as officials at the Treasury try to thrash out a ‘memorandum of understanding’ with Brussels by March, setting out how the UK and EU will continue to trade in the key financial services sector.

One option is ‘equivalence’, where the UK and the EU agree to grant each other access to their markets if they deem their rules are closely enough aligned.

But while the UK’s financial sector has granted the EU equivalence in 17 areas, so business can carry on as usual, Europe has so far refused to reciprocate.

Officials in Brussels claim to be worried about how the UK might decide to change rules in the future, amid concerns the Government could tear up red tape in an effort to lure more business to London post-Brexit. 

Mr Bailey said: ‘The EU has argued it must better understand how the UK intends to amend or alter the rules going forward. This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself.’

Top bosses in the City have already told Parliament that they would reject this approach. 

Delivering his annual speech to the City of London, held online rather than at the Lord Mayor’s stately Mansion House, he added that forcing the UK to blindly accept EU rules would be ‘unrealistic, dangerous and inconsistent with practice’ (file image of Andrew Bailey speaking on February 25, 2019)

In a boost for City workers, Mr Bailey said: ‘I believe we have a very bright future competing in global financial markets underpinned by strong and effective common global regulatory standards.

‘London will undoubtedly continue as one of the world’s leading if not the leading financial centre.’

Asked whether the UK risks being cut off from the EU financial system, he said: ‘I think that would be a mistake. It raises the cost of finance for everybody including the citizens of the EU. It will raise the cost of doing business in the EU, so I think it’s a mistake.

‘I can’t predict what will actually happen exactly because it’s not within our control, but I think we have to state the argument for why it’s important to have global standards, global markets and safe openness. And if we all sign up to that, there isn’t a need to go in that direction.’