Prime Minister Keir Starmer has decided to keep financial services off the table during discussions about increased alignment with the European Union. This decision brings relief to London’s financial sector, which has grown fatigued from Brexit-related uncertainties and regulatory shifts.
A government official confirmed that while cooperation with Brussels will continue in areas deemed economically beneficial, financial services will not be subject to alignment negotiations. The government will not pursue efforts to bring City firms back under European regulatory frameworks, according to reports from major financial publications.
Following the 2016 referendum, many major City institutions had supported EU membership and subsequently warned about potential disruptions and job relocations. Currently, however, financial leaders prefer stability over reopening discussions that could undo the regulatory changes implemented since Britain’s departure from the bloc.
Since leaving the EU, UK regulators have dismantled numerous rules that policymakers believed constrained competitiveness. These regulatory adjustments have resulted in higher executive compensation, reduced capital requirements, and more accessible stock market entry conditions for companies considering London listings.
Steve Fine, head of Peel Hunt investment bank, emphasized that reversing these regulatory improvements would jeopardize London’s recent resurgence in initial public offerings. He stressed that maintaining competitive advantages is essential for market recovery and that reimposing stringent regulations would undermine this progress.
Miles Celic, leader of TheCityUK industry group, acknowledged that cooperation with Europe, Britain’s second-largest financial services market, holds merit. However, he cautioned that rejoining EU structures would sacrifice regulatory independence and limit Britain’s ability to negotiate unique international agreements in exchange for standardized EU rules.
Officials indicated that spring 2025 negotiations with Brussels identified multiple cooperation opportunities, though financial services remained excluded from discussions. The government maintains commitment to exploring partnerships where economic benefits align with national interests, particularly given the EU’s significance to Britain’s financial sector.
