Prime Minister Keir Starmer has definitively excluded financial services from upcoming negotiations aimed at forging closer ties with the European Union. This move has been met with widespread relief from industry leaders in the City of London, who have expressed a strong desire to avoid another period of post-Brexit regulatory upheaval.
City Welcomes Clarity on Post-Brexit Path
A government spokesperson confirmed that while officials will continue to explore areas of cooperation with the EU that benefit the UK economy, there will be no push for financial firms to realign with the Brussels rulebook. This position, first reported by the Financial Times, marks a significant shift from the pre-referendum stance of many City bosses, who largely backed remaining in the EU.
Despite initial warnings of job losses and disruption after the 2016 vote, the financial sector's appetite has changed. Following years of adjustment, there is little enthusiasm for potentially unwinding the regulatory changes implemented since Brexit. UK regulators, under political pressure to boost competitiveness, have already overseen reforms including larger banker bonuses, adjusted capital requirements, and more flexible listing rules for companies aiming to float on the London Stock Exchange.
Risk to London's IPO Recovery
Industry figures have warned that reversing these post-Brexit adjustments could jeopardise the fragile recovery in London's market for initial public offerings (IPOs). Steve Fine, the chief executive of investment bank Peel Hunt, emphasised the work done to improve the UK's financial landscape.
"The UK now has materially less friction than most other European jurisdictions as a venue for listing," Fine stated. "If we want IPOs to come back, if we want the City to thrive... ripping it up and going back to where we were simply wouldn't make any sense. We do not want to be choking that off through excessive regulation."
The Trade-Off of Closer Ties
Miles Celic, chief executive of the influential lobby group TheCityUK, acknowledged the logic in seeking closer cooperation with the EU, the UK's second-largest market for financial services. However, he highlighted a crucial trade-off.
"But rejoining the single market or a customs union would not be a simple upgrade," Celic noted. "As a non-member, the UK would risk trading flexibility for uniformity: less scope to shape its own rules and fewer chances to cut bespoke deals beyond Europe."
The government's stance was clarified following a key summit with Brussels in the spring of 2025, where several areas for potential strengthened cooperation were identified. Financial services were notably absent from this agreement. The spokesperson reiterated that the UK remains open to pragmatic collaboration where it serves the national economic interest, but not at the cost of the regulatory autonomy now established in the Square Mile.
