Brexit: EU risks damaging its ability to compete with rest of world if it pushes London financial services away, Philip Hammond warns

Joe Watts
Philip Hammond spoke at the annual chancellor’s Mansion House speech: AFP/Getty

Philip Hammond has warned the European Union it risks damaging its chances of competing with the rest of the world if it pushes London’s financial services away after Brexit.

In a major speech the chancellor said both the UK and EU will be stronger if they stay “closely connected” when it comes to the City of London.

Mr Hammond appeared to take a swipe at the protectionist instincts of US president Donald Trump at the annual Mansion House speech, and hit back at domestic Tory critics who suggest his department is trying to thwart Brexit.

He also announced that the UK would set up a new Green Finance Institute to make it the centre of influence for new environmentally focussed markets.

Mr Hammond said one goal of the Brexit deal would be to maintain London’s position as the world’s leading international financial services centre, and that the UK was already working with Brussels to manage risks.

But he then went on: “The UK will continue after Brexit to lead and influence international thinking on the regulation of financial services – and we will do so as the hosts of a global financial centre.

“But we will all be stronger and have more influence in shaping the global debate, if we and our EU neighbours remain closely connected.

“Divided, we damage all our chances of growing businesses in Europe capable of competing in a future that will be dominated by major global players located in the US and Asia.”

He argued that his support for a closely connected Europe does not make the Treasury “on my watch, ‘the enemy of Brexit’”, but rather that it means his department is the “champion of prosperity for the British people”.

The chancellor’s speech comes after foreign secretary Boris Johnson recently risked a cabinet row after describing the Treasury as the “heart of remain”.

Mr Hammond said the world was only just embarking on a “technological revolution that will transform the way we live”, and that now was not the time to abandon conventional wisdom on free markets.

His suggestion that this sentiment is taking hold “around the world” is bound to be seen as a swipe at Mr Trump’s controversial decision to impose tariffs on steel from Europe and elsewhere.

Moving on, he said the world would have to mobilise $90 trillion by 2030 to hit its global climate goals, and that the UK should be at the forefront of financing the push.

He said: “We’re leading the way in green finance too. This is important for London as a financial centre and it is important for our planet.

“The UK is already leading the charge in this market – with nearly 80 green bonds raising more than $24bn across seven currencies.”

He went on: “Tonight I can announce we are establishing a new Green Finance Institute here in London, jointly funded by government and the City of London so that firms from across the world can access our one stop shop for world-leading climate science, and for capital here in the UK – the home to the markets of the future.”