Now is no time for a row with EU on finance - BoE's Bailey

The City of London likely to get only limited "equivalence"-based access to the EU financial market for the foreseeable future. Earlier on Wednesday, consultants PwC estimated Britain's tax receipts from its financial services sector were set to start falling from this year as a result of Brexit and the impact of the coronavirus pandemic.

Bank of England Governor Andrew Bailey urged the European Union not to pick a fight with Britain over trade in financial services after Brexit and he said the bloc was demanding more of London than of other partners.

The City of London has been largely cut off from the EU since Jan. 1 and Brussels has said it won't be rushed into decisions on granting access for financial firms in Britain, saying it wants to see how far UK rules will diverge. "This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself," Bailey said in a speech on Wednesday.

"We have an opportunity to move forward and rebuild our economies, post-COVID, supported by our financial systems," he said. "Now is not the time to have a regional argument." Bailey said rules for the financial services industry must adapt as the world changes but he ruled out a sudden lowering of rules in Britain after its exit from the EU.

"Let me be clear, none of this means that the UK should or will create a low-regulation, high-risk, anything-goes financial centre and system," he said. Britain's new trade deal with the bloc, which took effect on Jan. 1, does not cover financial services. The City of London likely to get only limited "equivalence"-based access to the EU financial market for the foreseeable future.

Earlier on Wednesday, consultants PwC estimated Britain's tax receipts from its financial services sector were set to start falling from this year as a result of Brexit and the impact of the coronavirus pandemic. The 135 billion-pound industry accounts for more than 10% of UK tax receipts.

Separately, the Centre for Economics and Business Research said Brexit will potentially cost London's economy 9.5 billion pounds a year.

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