Britain digs in over Brexit financial services deal

British finance minister Philip Hammond said Wednesday that a Brexit trade deal that excludes the financial services industry would not be "fair", despite the European Union already rejecting the idea. Hammond, making a key speech in the Canary Wharf finance hub, urged Brussels to seek a bespoke free trade agreement for Britain, adding it would be in their "mutual interest" to include the sector.
"A trade deal will only happen if it's fair and balances the interest of both sides," Hammond said, hours after the EU had rejected Britain's calls for completely free trade following Brexit. "Now, given the shape of the British economy and our trade balance with the EU 27, it's hard to see how any deal that did not include services could look like a fair and balanced settlement.
"Not only this is possible to include financial services in a trade deal but this is very much in our mutual interest to do so." He spoke shortly after the European Union on Wednesday flatly rejected such a move, not for the first time, by again declaring that there would be "no cherry-picking" for London.
Draft negotiating guidelines released Wednesday by EU President Donald Tusk rebuffed British Prime Minister Theresa May's recent call, made late last week, for a wide-ranging free trade agreement. Questioned about the guidelines, which also warned of "negative economic consequences" as a result of Britain's vote to leave, Hammond replied:
"It does not surprise me remotely that what they have set out this morning is a very tough position. That's what any competent, skilled and experienced negotiator would do." The finance minister meanwhile urged Brussels to seek a "unique" trade agreement for Britain. "It is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before. "To them I say: every trade deal the EU has ever done has been unique. The EU has never negotiated the same arrangement twice. It has bespoke relationships with Turkey, Canada, Singapore (and) South Korea."
Chancellor of the Exchequer Hammond outlined how British and EU markets are "already deeply interconnected" and their regulatory frameworks "identical". A bespoke British free trade deal would meanwhile follow the Canada-EU CETA agreement and the proposed US-EU Transatlantic Trade and Investment Partnership (TTIP), he added. "We have demonstrated how we can work together over the past decade as we have repaired and defended the financial stability of our continent.
"If it could be done with Canada or the USA... it could be done with the UK - the EU's closest financial services partner by far. The British finance minister's speech was a strong response to comments from French Economy Minister Bruno Le Maire, who Tuesday declared that any EU-UK free trade must not include financial services.
Le Maire said Britain should accept the current system used by non-EU financial companies allowed to operate within the European Union, known as "equivalence regimes". "I have not ruled out equivalence," Hammond declared Wednesday when asked by reporters about the matter. "I think the principle of equivalence - if it is based on mutual agreement, underpinned by objective analysis and proper procedures - could be the basis on which we could move forward."
London has already accepted that under Brexit, the capital's financial firms will lose so-called passporting rights that allow them to trade freely with other EU countries. Large financial institutions, including British bank HSBC, Swiss peer UBS and US giants JPMorgan and Morgan Stanley, have already confirmed plans to move some London activities to Paris and elsewhere, as a result of Britain's looming departure from the bloc.