UK-EU Memorandum of Understanding Signed on Financial Services Cooperation
On the 27th June 2023, the Chancellor of the Exchequer, Jeremy Hunt, visited Brussels to discuss future cooperation between the EU and the UK on financial regulation across the two jurisdictions. The Memorandum of Understanding (MoU), whilst a non-legally binding agreement, will establish an ongoing relationship, allowing information sharing and collaboration to meet shared regulatory objectives. In particular, the MoU creates the groundwork for a bilateral exchange of views on the market landscape and financial stability, discussions of equivalence, and enhanced cooperation as members of international bodies (such as G20).
An MoU, whilst politically significant, is not a legally binding document and the UK still retains regulatory autonomy following Brexit, including over nuances of the UK financial services sector. As the appetite for reestablishing trading ties with the EU post-Brexit increases, future collaboration is an important step in reestablishing confidence within key market stakeholders. The signing of an MoU, signals increased cooperation as both markets seek increased stability in both their economies and financial markets. As such, the MoU provides a basis to strengthen trade ties between the economies that, being mutually beneficial, and instrumental, to the UK signalling a competitive financial services sector. Increasing collaboration on the regulatory framework for financial services seems like a logical step, and with much of the two regimes already aligned, the UK should be well positioned to influence future regulatory priorities across both markets.
