The Big Brexit bonfire—that'll never happen

Financial and related professional services are responsible for around one in 10 UK jobs; positions based in locations from Brighton to Glasgow. Our financial and professional services sector benefits from our reputation for good regulation and legal probity.

As we leave the EU, much has—rightly—been made of the Brexit uncertainty and the high-profile firms already making cuts in their British headcount. Jonathan Reynolds, Labour’s Shadow City Minister, has pushed for government to acknowledge the need for long-term certainty, in order to prevent this loss of expertise.

Ominously, however, Theresa May’s Brexit “plan” referred to increased “flexibility” for services, as part of a new regulatory relationship. During a Commons debate on the Brexit White Paper, numerous Conservative speakers suggested that financial and other services could benefit from being cut more slack on the rules.

But aside from a small number of hedge fund managers, there is no clamour from the City to remove EU-level regulation. Many financial analysts, bankers, insurers and other City workers are genuinely concerned by the UK government’s lack of focus on regulatory clarity and promotion of stability.

Deregulation would actually harm UK financial services—and do so for little advantage. It would come at the cost of EU market access, exacerbating the exodus of firms and jobs from our country. And those who advocate it forget the fact that financial services in Britain have already absorbed the costs of adapting to EU regulations.

Since the financial crisis a whole panoply of financial regulation has been introduced, aimed at reducing the financial reward from irresponsibly risky behaviour. The regulations which put these new rules into practice may sound like something out of Star Trek: MiFID/MiFIR, CARRP, CSDR, MAD/MAR, EMIR, BSR, BRRD, AIFMD and others. They may sound spoddy, but these detailed sets of rules have removed many of the factors which precipitated the 2008 crash.

Ten years on, everyone still feels the impact of the financial crisis from failures of regulation. Its effect has been prolonged by government policies, and our communities are still suffering. It would be a travesty if ideologues use the “opportunity” of leaving the EU to deregulate our financial services.

Soon after the referendum, when still an MEP, I urged ministers to stress to their EU counterparts our shared interest in good regulation. Instead our government threatened a race to the bottom. We now see other EU countries threatening to use financial regulation to shut UK firms out of their markets. Our government needs to acknowledge that the bonfire of regulation would be not just bad for the EU, but bad for our economy as well.