Philip Hammond will insist on Wednesday that Britain can overcome EU opposition and include financial services in a post-Brexit free trade deal.
The chancellor is expected to use a speech in the City to challenge the idea – voiced strongly by France’s finance minister on Tuesday – that financial services have never been included in trade deals because of their complexity and the risks to stability.
Hammond will argue that every trade deal the EU has concluded in the past has been unique and that is “time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before”.
The chancellor, who is being strongly lobbied by the City to secure access to the EU after Brexit, will say that bespoke agreements have already been agreed between Brussels and Turkey, Canada, Singapore, South Korea and Switzerland.
Speaking in London on Tuesday, Bruno Le Maire, the French finance minister, ruled out financial services being part of a trade deal.
“The rules will change. We don’t believe that financial services can be part of an FTA,” Le Maire said. “Because financial services are not goods. They cannot be traded and supervised in the same way.”
The French finance minister, who met Hammond for talks on Tuesday, said UK financial firms would have to make do with the same arrangement for access to the EU – known as equivalence – used by American and Japanese firms.
But the chancellor will say: “I am clear not only that it is possible to include financial services within a trade deal but that it is very much in our mutual interest to do so.
“A trade deal between the UK and the EU must start from the reality of today: that our economies, including in financial services, are interconnected; that our regulatory frameworks are identical.”
The chancellor is expected to challenge Le Maire’s opposition to financial services being included in a free trade agreement by noting that the EU itself wanted financial services cooperation to be included in its controversial Trans-Atlantic Trade and Investment Partnership (TTIP) with the US.
Hammond will add that both with TTIP and the agreement finally struck with Canada, the EU sought to promote convergence between separate markets with low levels of interconnectedness, and that it was possible for the EU and the UK to do better.
“Our markets are already deeply interconnected; and we have demonstrated how we can work together over the past decade as we have repaired and defended the financial stability of our continent.
“If it could be done with Canada or the USA it could be done with the UK – the EU’s closest financial services partner by far.”
