Prime Minister Keir Starmer has definitively excluded financial services from upcoming negotiations on closer alignment with the European Union, a move that has been welcomed by a City of London weary of post-Brexit uncertainty.
City Welcomes Clarity on Post-Brexit Path
A government spokesperson stated that while officials would continue to explore areas of cooperation with the EU where it is in the UK's economic interest, there will be no push for firms in the Square Mile to return to the Brussels-era regulatory rulebook. This exclusion, first reported by the Financial Times, marks a significant shift from the pre-2016 referendum period when many City leaders backed EU membership.
Today, the industry's priority is stability. Following the UK's departure, regulators have worked to dismantle a series of EU rules that were seen as hampering competitiveness. These post-Brexit changes have included allowing larger banker bonuses, setting lower capital requirements for some institutions, and loosening listing rules to attract more companies to the London Stock Exchange.
Industry Leaders Warn Against Regulatory Reversal
Financial executives have argued that reversing these reforms would be counterproductive. Steve Fine, the chief executive of investment bank Peel Hunt, emphasised the work done to improve the UK's financial landscape. "A huge amount of work and effort has gone into improving the landscape for financial services in the UK," he said, warning that returning to the old EU framework "simply wouldn't make any sense" and risked choking off the recovery in London's IPO market.
Miles Celic, chief executive of the lobby group TheCityUK, acknowledged the logic of closer ties with the EU, the UK's second-largest market for financial services. However, he cautioned that rejoining the single market would involve a major trade-off. "As a non-member, the UK would risk trading flexibility for uniformity," he noted, highlighting the loss of autonomy to shape its own rules and strike global deals.
Government Focus on Selective Cooperation
The government's position was clarified following a key summit with Brussels in the spring of 2025, where several potential areas for strengthened cooperation were identified. Financial services were not part of this initial agreement. The official stance remains one of pragmatic, sector-by-sector engagement rather than a broad return to EU regulatory alignment.
This decision provides the City with the clarity it sought, allowing businesses to plan for a future where the UK maintains its own regulatory sovereignty over finance, while selectively pursuing cooperation with European partners on other matters.
