The UK’s financial markets are capable of weathering challenges brought about by Brexit and London will continue as the world’s best international finance centre, despite the UK leaving the EU, according to Economic Secretary to the Treasury, Harriett Baldwin.
Speaking at today’s BBA Retail Banking Conference, held in London, Baldwin outlined that the financial services and banking sector should be placed at the heart of any negotiations being held between the UK and the rest of Europe.
Baldwin said that it is important that the best deal is secured for the financial services industry, prior to Article 50 being triggered.
“I want us to agree an economic relationship with the rest of Europe that provides for the best possible terms of trade in financial services,” she told delegates at today’s event.
“Only the UK can trigger Article 50, and as the Chancellor made clear on Monday, we should only do that when our new Prime Minister has spelled out a definite view about the new arrangement we are seeking with our European neighbours.
“In the meantime, and during the negotiations that will follow, there is no change to people’s rights to travel and work, and to the way our goods and services are traded, or to the way our economy and financial system is regulated.”
Baldwin pointed that Britain’s financial services sector has been through “trying times” before, something that, she says, she saw “first-hand” during her 22 years working in financial services,
The crash of 1987, the ERM crisis, Long Term Capital Management’s collapse, the tech bubble and the banking crisis, all proved that UK financial markets are capable of “weathering challenges”, she said.
“They adapt quickly,” she said. “They find new opportunities. They price in and offer ways of managing risks like these. I think British banks are well placed to manage the uncertainty resulting from the last week’s vote”.
And despite the shock element of last week’s ‘Leave’ vote, Baldwin pointed that the Government and financial regulators have spent the last few months putting in place “robust contingency plans” for the immediate aftermath.
“We’ve worked systematically with each major financial institution to make sure they’re ready to deal with the consequences of this outcome. Swap lines were arranged in advance so that the Bank of England can lend in foreign currency if needed.
“As you know, the Governor was clear that the Bank of England stands ready to provide £250bn of funds, through its normal facilities, to continue to support banks and the smooth functioning of markets.”
‘Most experienced financial centre in the world’
Baldwin dubbed the City as the most international, most experienced financial centre in the world, with London consistently leading the rankings as the world’s global financial capital.
“It has the best business environment; The most impressive infrastructure; The best human capital; A very strong regulatory framework; And the top overall reputation,” said Baldwin.
“The UK also has natural strengths in financial services; a central time zone, the English language. And our country boasts an unrivalled pool of investors. Not only in terms of size, but in quality and international experience.
‘Open for business’
“And this is supported by world leading legal and professional services. It is for these reasons that I am confident that we will adjust and overcome the challenges presented. The British economy is fundamentally strong, we are highly competitive and we are open for business,” she said.