The winner of the race to become the UK’s next prime minister should try to improve relations with the European Union, the City of London Corporation’s top official said.
“We should not see the EU as an enemy… we need to work in partnership with it and not against it,” said Chris Hayward, who took over as the City of London Corporation’s policy chair in May.
“It was a challenge under [Boris Johnson], because, of course, he was seen as the architect of the final ‘get Brexit done’ campaign,” Hayward told Financial News. “It has meant political discussions have been very, very difficult, not least, because of the Northern Ireland protocol issue, which has been hanging over our heads.”
The government introduced a bill in June that would allow it to tear up parts of the Brexit deal it signed with the EU in 2019 by removing a customs barrier between the British mainland and Northern Ireland.
The EU has said the UK is reneging on the agreement and is breaking international law.
Hayward said it was important that the UK was seen to respect international law and called for the two sides to reach a deal.
“The UK has to operate within international law. We always have done and it is part of what our reputation and our integrity is based around,” he said. “I would ask government therefore to work with the EU to come to a considered solution on that as fast as possible.”
Hayward also called on whoever wins the prime ministerial race between Liz Truss and Rishi Sunak to back a proposed requirement for financial regulators to consider economic growth on top of consumer protection and financial stability in their remit.
The clause is contained within the Financial Services and Markets Bill, which was unveiled by Chancellor Nadhim Zahawi on 22 July.
“I would urge any future prime minister to ensure that this is retained,” Haywood said. “Ensuring that Britain’s financial and professional services sector remains competitive on the global stage… is really important in a post-Brexit Britain.
“So commitment to that from both candidates from the sector’s point of view would be a really big, big plus.”
Finance jobs coming to London
Haywood is also bullish about the movement of jobs to the City, noting “thousands” of new finance roles that have come to London as a result of EU firms needing to launch UK operations post-Brexit.
He said that although more UK finance jobs had flowed to the EU post-Brexit, many roles had moved the other way as well.
“What has been interesting is the number of new jobs that have been created in the City as a result of European institutions wanting and needing to open up operations in London because of Brexit,” Hayward said.
He said he could not put an exact figure on the number of jobs being created, but a City of London spokesperson said it amounted to “thousands” of new roles.
Pointing to research from EY — which showed 7,000 finance jobs had moved to the EU from the UK by December 2021, compared to its 2016 prediction of 12,500 job losses — Hayward said fears that Brexit would lead to a massive outflow of finance jobs from London to the EU had not materialised.
“Many of us were terrified that there would be a massive loss of jobs in the UK [post-Brexit]. That hasn’t happened,” he said.
According to EY, the number of new hires across Europe and the UK since the referendum that have been publicly linked to Brexit stands at around 5,400, with around 2,900 new jobs created on the continent and 2,500 in the UK.
The need for EU firms to have operations on the ground in London post-Brexit had led to jobs flowing to the UK from Europe as EU firms establish UK bases, Hayward said.
Financial Conduct Authority data shows 1,500 European Economic Area firms are using the FCA’s temporary permissions regime, which allows EEA firms that were previously passporting into the UK under EU rules to continue to operate here until December 2023.
Around 1,000 EEA firms could set up offices in the UK for the first time, including almost 230 firms currently domiciled in Ireland, 186 from France and 168 from Germany, the data suggests.
“There has been a win/lose,” Hayward said. “We’ve lost some jobs. But we’ve also gained a whole load of new jobs out of Europe.”
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