Britain needs 'new paradigm' for financial services trade with EU: Hammond

LONDON (Reuters) - Britain will need a “new paradigm” to sell financial services to the European Union after Brexit as existing trade deals the EU has with foreign countries do not go far enough, the country’s finance minister said on Tuesday.

File Photo: Britain's Finance Secretary Philip Hammond leaves 11 Downing Street, London, Britain, November 15, 2017. REUTERS/Toby Melville

Philip Hammond, widely viewed as the most pro-European of Prime Minister Theresa May’s senior colleagues, said in a speech at the annual dinner of finance association CityUK that future trading arrangements with the EU had to be “durable and fair”.

Britain has yet to start serious trade talks with the EU ahead of its March 2019 departure, as the process is currently bogged down in disagreements over border arrangements between the British province of Northern Ireland and the Irish Republic.

May came under pressure on Tuesday from opposition parties and some allies to soften the EU divorce by keeping Britain in the single market and customs union after Brexit, hours after an attempt to break the logjam over the Irish border collapsed.

Hammond said he would not comment on the events of last two days concerning Northern Ireland, but added that Britain and the EU had made “good progress” in talks over recent weeks.

“I am optimistic that we will achieve sufficient progress at the Council next week, and move on to the next stage of the negotiations,” Hammond said, referring to a scheduled meeting of EU leaders on Dec. 14 and 15.

Britain wants to protect its existing trading arrangements with the EU, and the type of deal the EU has struck with other countries in the past is not acceptable, Hammond said.

“We must develop a new paradigm for our future trading relationship in financial services,” he said.

“No existing trade agreement, nor third-country access to the EU, could support the scale and complexity of reciprocal trade in financial services that exists between the UK and the EU,” he added.

Earlier on Tuesday, the Bank of England reiterated its warning that without legislative changes in Britain and the EU, tens of billions of pounds of cross-border insurance contracts risk legal uncertainty after Brexit, and said it was considering if banks needed to hold extra capital.

Reporting by Guy Faulconbridge and Andy Bruce; writing by David Milliken; editing by Mark Heinrich