Chancellor makes Mansion House Speech

Philip Hammond has given the delayed Mansion House speech. He spoke of the Government’s priorities and its commitment to delivering better public services, higher real wages and increased living standards through stronger growth, and how it needs to be delivered through rising productivity. He stressed that this means more trade, and strong trade links with European countries post-Brexit, as well as seeking out new opportunities with both old and new third-country partners.  He said 90% of respondents to a recent poll believe that free trade is beneficial.

He wants access to EIB funding to continue while the UK remains an EU member, and is hopeful a relationship can continue after that. However, he is planning to expand the support available to capital funding in the UK after Brexit. The British Business Bank will raise the limits on the amount it can invest in venture capital funds from 33% to 50%.

He then moved to discuss the importance of “liberalisation” of services, to make the most of globalisation and talent, in negotiating Brexit in a way that works for Britain.

The priorities, he said, are for:

  • a comprehensive agreement for trade and services;
  • mutually beneficial transitional arrangements; and
  • frictionless customs arrangements.

He commented that this will almost certainly need an implementation period for facilitating cross-border trade and to ensure the land border in Ireland remains open.

On financial services, he criticised the “protectionist” agendas being advanced “disguised” as arguments about regulatory competence, financial stability and supervisory oversight. But he acknowledged some concerns are genuine and said it must be got right for the sake of both the UK and EU economies. He stressed it is crucial to avoid fragmentation of financial services and said 3 principles should guide the process to achieve the right outcome:

  • an evidence-based, symmetrical and transparent process for establishing regulatory requirements for cross-border business between the UK and EU;
  • reciprocal and reliable cooperation agreements, which prioritise financial stability; and
  • confidence for firms that the arrangements are permanent and reliable.

Mark Carney, speaking from the BoE’s perspective, also looked positively at the potential benefits of a new sort of free trade in financial services, enabled by increasingly global standards, and already exemplified by CCP standards.