The uk-eu relationship in financial services

 
reforms, May 2022 
42
Planned UK regulatory reforms 
43
The Listings Review 
43
Wholesale Markets Review 
44
Solvency II Review 
45
Further UK-driven divergence 
45
EU-driven divergence 
48
International standards 
49
Data adequacy 
50
Box 2: Data adequacy explained 
50
Chapter 5: Opportunities 
54
FinTech 
54
Green finance 
55
Approaches to securing market access 
58
CONTENTS
Page

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The labour market 
59
The importance of openness 
59
Summary of conclusions and recommendations 
61
Appendix 1: List of Members and declarations of interest 
67
Appendix 2: List of witnesses 
69
Evidence is published online at 
https://committees.parliament.uk/
work/6514/ukeu-relationship-in-financial-services/publications/
and 
available for inspection at the Parliamentary Archives (020 7219 3074).
Q in footnotes refers to a question in oral evidence.

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3
THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
SUMMARY
Introduction
The UK financial services sector is of vital importance to the UK economy 
as a whole, employing 2.3 million people and making up 10% of total UK tax 
receipts. Though traditionally closely associated with the City of London, the 
sector is well-established across the UK; two thirds of employment in the sector 
is outside London. The sector is also an important contributor to the UK’s 
international trade, comprising 19.1% of all UK services exports.
The EU is an important trading partner in this sector, making up 37% of total 
UK financial services exports in 2019. The post-Brexit UK-EU Trade and 
Cooperation Agreement (TCA) contained few provisions for trade in Financial 
Services, but this had long been anticipated and prepared for. Financial services 
jobs have moved from the UK to the EU as a result of Brexit, but in far smaller 
numbers than some expected; current estimates suggest 7,000 jobs have moved, 
compared to estimates of 75,000 in 2016. Nevertheless, the Committee warns 
against complacency in this regard, as it is not yet clear whether the impact of 
Brexit on employment has fully played out.
While acknowledging the challenges that Brexit has presented for the sector, 
witnesses the Committee spoke to were largely optimistic in their outlook. 
London has retained its position as the world’s second largest (or most 
important) financial centre and the most important in Europe, and there was 
a strong sense among the witnesses we spoke to that the sector has retained its 
resilience. However, the Government must ensure that its approach to financial 
services delivers for the whole country and the whole economy as well as the 
City of London.