Lobby group TheCityUK, which represents the interests of British banks and other financial services groups, has reversed its previous stance that the UK should remain a member of the European Union (EU).
Having campaigned against Brexit in the lead-up to the referendum last June, it now believes that post-Brexit trade agreements offer the opportunity to enhance London’s status as a leading financial capital and create new growth opportunities for the UK’s finance sector.
Among its latest recommendations, TheCityUK believes the government should focus its trade policy on fast-growing economies, and encourage foreign direct investment from the so-called Brics (Brazil, Russia, India, China and South Africa) countries. The report also says the UK could take a lead role in areas such as data protection and cyber security.
“The UK is the leading exporter of financial services globally, generating a record high trade surplus in 2015 of US$97bn (£77.5bn),” said Gary Campkin, TheCityUK’s director of policy and strategy. “Around 40% of the UK’s trade surplus in financial services is with Europe.
“However, over the next 10 to 15 years, 90% of global economic growth is expected to be generated outside Europe and these markets – developed and emerging – must be a priority focus for the country post-Brexit.”
The announcement comes as reports suggest that insurers want UK regulator the Prudential Regulation Authority (PRA) to amend key parts of the Solvency II directive, which was introduced a year ago to codify and harmonise EU insurance regulation and bears some similarities to the banking sector’s Basel III capital adequacy regime.
Industry body the Association of British Insurers (AVI) and individual insurers have obtained legal advice suggesting that the PRA can amend key planks of the directive, which they claim are “flawed”, unilaterally from the 27 other states. The advice suggests that the PRA has the power to change 23 areas of Solvency II, including the controversial “risk margin”, which has been blamed for driving up the cost of annuities.
The ABI’s head of prudential regulation, Steven Findlay, commented: “Legal advice that the industry has sought indicates that some of these flaws could be addressed by how the UK implements the directive, without needing to change the actual European regulations.”
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