The president of the EU’s council of financial ministers pledged closer ties with the City of London yesterday as he hailed a “new footing” in the relationship between Keir Starmer’s government and the bloc.
Speaking at the Guildhall in the Square Mile, Paschal Donohoe, the Irish minister for public expenditure and president of the Eurogroup, said he had met with the Chancellor Rachel Reeves to discuss unlocking investment from pension funds and praised a pact signed between the EU and UK on financial regulation last year.
“It’s hugely welcome that we have moved onto a new footing in our relationship, which allows these views to be exchanged,” Donohoe said.
“Financial instability does not respect borders, and this is a further reason why we have to work so closely together, and to hear the UK government’s intention to strengthen and deepen relations with the EU is therefore so welcome.
“We’ve always, on a national level in Ireland, supported the closest possible relationship between the EU and the UK. We continue to do so, and I hope the first steps taken to rebuild trust and develop relationships turn into a steady walk.”
Donohoe was also granted the Freedom of the City of London yesterday in a sign of easing tensions between London and Brussels after a fractious few years under the last Tory government.
Since taking power in July, the Prime Minister, Keir Starmer, and Reeves have pledged to “reset” the relationship with the EU while insisting it “does not mean reversing Brexit or re-entering the single market or the customs union”.
While the UK’s financial services sector, which makes up around 12 per cent of GDP, has been among those to feel the dent of the UK’s exit from the EU, the impact has been less than initially feared. Investment banks and trading outfits had scrambled to beef up their presence in EU financial centres but the worst warnings of an exodus have not crystallised.
According to a survey from EY, the UK extended its lead as Europe’s top destination for investment in financial services last year despite the impact of Brexit.
The UK attracted 108 financial services projects last year, up from 76 in 2022 and well ahead of European rivals. France, in second place, secured just 39 foreign direct investment (FDI) projects in 2023.
London was unseated by Amsterdam as the busiest hub for share trading in Europe after Brexit but has since regained its title as of June.