Philip Hammond has told the European Union that the United Kingdom would be unlikely to sign a post-Brexit trade deal that did not include financial services.
The EU has proposed a deal that would see zero tariffs on goods but only provide market access for services “to an extent”.
In a speech in the City of London on Wednesday afternoon, the Chancellor said “a trade deal will only happen if it is fair and balances the interests of both sides”.
“Given the shape of the British economy and our trade balance with the EU 27, it’s hard to see how any deal that did not include services could look like a fair and balanced settlement,” he said.
“I am clear not only that it’s possible to include financial services within a trade deal, but it is very much in our mutual interests to do so.”
Donald Tusk, the president of the EU Council, earlier today said Brussels would never agree to give the UK special access for its financial services industry.
“No member of state is free to pick only those sectors of the single market it likes,” he said. “A pick-and-mix approach for a non-members state is out of the question.”
The EU draft plan for a trade deal proposed a free trade agreement (FTA) similar to the one struck with Canada.
But Hammond said the relationship the EU itself wants with the UK after Brexit “couldn’t be contained within a straight forward FTA”.
“The EU itself has noted because of the proximity of the UK and the EU, because of the complexity and scale of existing trade flows, in many respects a simple FTA agreement would leave many questions unresolved that would have to be resolved becayse the relationship between the UK and EU countries will never be the same as between Canada and EU,” he added.
Hammond warned European capitals that it would not be Paris, Frankfurt or Dublin that would benefit if the City of London suffered, but New York, Singapore and Hong Kong.