![\"Maria](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/01\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/9e4e0fb8-90bf-4579-a2cd-904b05999a41.jpg\")
EU financial services commissioner Maria Lu\u00eds Albuquerque with Bank of England governor Andrew Bailey at the Mansion House speech in July 2025 \u00a9 Charlie Bibby\/FT<\/p>\nUnlock the Editor\u2019s Digest for free<\/p>\n
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n
Sir Keir Starmer will exclude the City of London from his push for \u201ccloser alignment\u201d with the EU, following lobbying by financial services firms against any\u00a0return to Brussels rules.<\/p>\n
British government officials told the FT that while ministers wanted \u201ccloser co-operation\u201d with the EU on financial services, the prime minister had no intention of trying to reintegrate the sector with the Brussels rule book.<\/p>\n
Starmer\u2019s comment this week that \u201cif it\u2019s in our national interest to have even closer alignment with the single market, then we should consider that\u201d raised concerns in the Square Mile.<\/p>\n
Some ministers including David Lammy, deputy prime minister, have talked up the benefits of a new customs union with the EU.<\/p>\n
\u201cIt\u2019s the last thing we want to be talking about,\u201d said one City lobbyist, arguing that British financial services had moved on from the fraught debate about single market access in the aftermath of the 2016 Brexit vote.<\/p>\n
Steven Fine, chief executive of investment bank Peel Hunt, told the FT: \u201cThe UK has made substantial progress on financial services reform over the past few years and most regulatory lawyers will tell you that we have significantly less friction in our regulatory framework compared with most jurisdictions in Europe. You don\u2019t want to create potential uncertainty just as the City is recovering its mojo.\u201d<\/p>\n
One City non-executive director added: \u201cThere\u2019s an argument that financial services doesn\u2019t need to be included as our dominant position means the EU needs us more than we need them.\u201d<\/p>\n
The question of Britain again becoming a \u201crule-taker\u201d from Brussels \u2014 fiercely opposed by the Conservatives and Reform UK \u2014 has come back on to the agenda as some Labour MPs and the Liberal Democrats push for closer economic integration.<\/p>\n
Ministers will present legislation to parliament in the coming weeks to allow EU laws in specific areas such as food standards, animal welfare to facilitate smoother trade.<\/p>\n
Brexit imposed a costly burden on British banks and after 2016 many of them lobbied for an \u201cequivalence\u201d deal to maintain EU market access in return for aligning UK banking regulation with Brussels.\u00a0<\/p>\n
But since then, interest in such a deal among financiers has faded. \u201cTen years ago equivalence would have been very valuable, but now the world has moved on,\u201d said Kerstin Mathias, international affairs director of the UK Finance trade body.\u00a0<\/p>\n
Miles Celic, chief executive of TheCityUK, which represents the financial services industry, said closer co-operation with the EU made sense. \u201cBut rejoining the single market or a customs union would not be a simple upgrade. The UK would risk trading flexibility for uniformity: less scope to shape its own rules and fewer chances to cut bespoke deals beyond Europe.\u201d<\/p>\n
One government official said the City\u2019s concerns were \u201cvalid\u201d, and ministers were \u201cnot looking at alignment\u201d of rules affecting financial services. \u201cThis is one area where we have diverged a lot from the EU since Brexit.\u201d<\/p>\n
Another official said: \u201cIt doesn\u2019t really make sense to follow EU rules, the UK is the bigger market.\u201d<\/p>\n
A government spokesperson said the UK-EU \u201ccommon understanding\u201d struck last year \u2014 which opened the way for Britain adopting Brussels rules in areas like food standards and energy \u2014 was narrowly drawn and did not include financial services.<\/p>\n
\u201cHowever the EU is the UK\u2019s second largest trading partner for financial services and we continue to explore areas of co-operation where it is in our economy\u2019s interest.\u201d<\/p>\n
EU financial services commissioner Maria Lu\u00eds Albuquerque with Bank of England governor Andrew Bailey at the Mansion House speech in July 2025 \u00a9 Charlie Bibby\/FT<\/p>\n
In a sign of attempts to forge closer co-operation between the two sides, chancellor Rachel Reeves has attended meetings of EU finance ministers, while EU financial services commissioner Maria Lu\u00eds Albuquerque attended Reeves\u2019 Mansion House speech last year.<\/p>\n
Reeves has also spoken about \u201cdynamic alignment\u201d to help industries such as the chemicals sector overcome post-Brexit obstacles.<\/p>\n
Mats Persson, macro strategy leader at EY-Parthenon, said more companies \u201care seeing the benefits of the UK\u2019s ability to regulate in a nimble and innovative way, particularly in relation to emerging technology and access to global markets\u201d.<\/p>\n
Last September, the UK and US launched a task force<\/a> to examine ways to enhance collaboration in areas such as digital assets and capital markets, a move that would have been harder when Britain was still in the EU.<\/p>\n UK regulators have recently taken advantage of their ability to remove or rewrite rules inherited from EU directives, such as scrapping the cap<\/a> on bankers\u2019 bonuses or delaying the introduction of the so-called Basel III reforms on bank capital.<\/p>\n Financial services ranks as one of the UK\u2019s largest sectors, accounting for around 9 per cent of economic output and providing 1.1mn jobs. <\/p>\n