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<p>Earlier this year, the Prime Minister set out the UK’s vision for its future economic
partnership with the EU at Mansion House and the Chancellor detailed how this would
work for financial services during a speech at HSBC.</p><p> </p><p>We will be seeking
a bold and ambitious free trade agreement between the UK and the EU. Such a deal will
be of greater scope and ambition than any such agreement before it, so that it covers
sectors crucial to our linked economies such as financial services. This will require
detailed technical talks, but as the UK is an existing EU member state, both sides
have regulatory frameworks and standards that already match, with full alignment on
Day One of our exit.</p><p> </p><p>As the Prime Minister set out, we will not be seeking
passporting, because we understand this is intrinsic to the single market of which
we would no longer be member. Also, the Chancellor has been clear that a deal based
on the EU’s existing third-country equivalence regimes would be inadequate for the
scale and complexity of UK-EU trade.</p><p> </p><p>Instead, given the highly regulated
nature of financial services, and our shared desire to manage financial stability
risks, we will need a collaborative, objective framework that is reciprocal, mutually
agreed, and permanent and therefore reliable for business.</p><p> </p><p>The Government
has said that the principle of mutual recognition and reciprocal regulatory equivalence,
provided it is objectively assessed, with proper governance structures, dispute resolution
mechanisms, and sensible notice periods for market participants, could provide an
effective basis for such a partnership.</p>
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