Speaking at a Thomson Reuters event in the City of London today, Bailey said: “Some of the commentary on Brexit suggests that it must inevitably lead to restrictions on trade, on the location of activity in financial services and on open markets. My question is therefore whether restricting trade is an inevitable or necessary response to Brexit and in the interests of anyone? My answer to this is ‘no’.”
There has been speculation that the UK and especially City-based financial firms will lose some of their access to the single market through the loss of their ‘passport’, with an accompanying debate about just how many jobs may move to other European financial centres.
In addition, there is still discussion about whether the EU will allow eurobond clearing to continue to be based in London post-Brexit or demand that it moves to within the EU’s borders.
Bailey made a plea for the continuation of open markets in financial services, saying that free trade and freedom of location are important to the functioning of the global economy.
He added: “Well-integrated financial markets support economic growth and employment. They reduce the cost of access to financial services by encouraging competition.
“Firms should be able to take their own decisions on where they locate, subject to appropriate regulatory arrangements being in place, which preserve the public interest. Authorities should not dictate the location of firms. Rather, we should allow open markets to shape those choices, always subject to our public interest objectives.”
Bailey also argued that the regulatory regimes in the UK and EU should continue to co-operate and recognise each other fully, pointing to ongoing UK implementation of Mifid II as an example.
“Does Brexit mean abandoning the use of regulatory co-operation to ensure sufficient alignment of standards and outcomes so that open markets can prevail? It should not.”
Yet the position does not chime with that of the EU’s chief negotiator.
Speaking to the economic and social committee of the EU parliament in Brussels this morning, Michel Barnier set out three points he did not feel were well understood in the UK.
He said: “Number one. The free movement of persons, goods, services and capital are indivisible. We cannot let the single market unravel. Number two, there can be no sector-by-sector participation in the single market. Three, the EU must maintain full sovereignty for deciding regulations.
“These three points were already made very clear by the European council and by the European parliament. But I am not sure whether they have been fully understood across the Channel.”