City chairman: Burnham is right to pursue closer ties with the EU

City chairman Chris Hayward argues that Prime Minister Boris Johnson is correct to seek closer ties with the European Union (EU). Despite changes in the UK-EU relationship over the past decade, the City of London has demonstrated remarkable resilience. The UK remains the world's leading financial centre, with a 25% workforce growth to nearly 700,000 jobs. EU banks are now conducting 60% more business with UK institutions compared to pre-referendum levels.

Johnson's pursuit of closer EU ties is essential to unlock growth, as the EU is the UK's largest trading partner. Hayward emphasizes the importance of dismantling barriers to facilitate this growth. He visited Germany, the UK's second-largest sovereign trading partner and third-largest trading partner outside the EU, to discuss the strong economic relationship between the two nations. Trade between the UK and Germany is worth £149 billion annually, with a quarter of that amount in services.

The recent ratification of the Kensington Treaty between the UK and Germany signifies a commitment to promoting prosperity, growth, and innovation. The City of London supports this agreement and encourages both sides to utilize it for deeper cooperation. At the upcoming EU summit on November 20th, financial and professional services should be prioritized in discussions.

Mutual recognition of professional qualifications would facilitate access to talent, while clearer data arrangements would bolster digital trade and innovation. Additionally, enhanced regulatory cooperation could streamline cross-border investment without compromising standards or financial stability.

Hayward cautions against creating new barriers that hinder investment, particularly citing the European Union's Capital Requirements Directive (CRD VI). If implemented as currently drafted, CRD VI could make it more challenging for British banks to support businesses on the continent. The UK must maintain its competitiveness by ensuring that international investors have confidence in its ability to establish businesses, raise capital, and plan for long-term growth.

Emphasizing the importance of financial services, Hayward urges both sides to keep financial services at the forefront of cooperation discussions, reduce friction, and provide investors with the certainty they need to commit capital. By leveraging their strong, shared foundations, Britain and Germany can collaborate to create jobs, security, and prosperity across Europe.