London Daily

Focus on the big picture.
Wednesday, Aug 13, 2025

Bank of England governor warns EU demands for City are ‘unrealistic’

Bank of England governor warns EU demands for City are ‘unrealistic’

Andrew Bailey uses Mansion House speech to back government’s hardline stance for next round of Brexit talks
The governor of the Bank of England has called EU demands for City banks to comply with Brussels regulations unacceptable, in a combative speech backing the government’s hardline stance in the next round of Brexit talks.

Andrew Bailey said the UK should refuse to allow Brussels to restrict how the UK industry develops and look instead to global financial regulators as the main rule makers.

Calling the EU insistence on an equivalence regime out of line with all other deals signed by Brussels, the central bank head lined up with Boris Johnson as the UK embarks on what are expected to be difficult talks over the next few months.

Speaking online at the annual Mansion House dinner to finance industry executives, Bailey said the EU had granted equivalence status – a mutual recognition of each side’s regulatory standards – to Canada, the US, Australia, Hong Kong and Brazil based on their adherence to international regulations, but was insisting that London also track the twists and turns of EU rules.

“The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards,” he said.

“This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself. It is hard to see beyond one of two ways of interpreting this statement, neither of which stands up to much scrutiny.”

Bailey said the first interpretation was that the EU thought rules should never change, something that the governor said was “unrealistic, dangerous” and inconsistent with how the EU operated.

Instead, he favoured the interpretation that the EU would only grant equivalence status if the UK agreed to change its rules whenever the EU did. “But that is rule-taking, pure and simple. It is not acceptable when UK rules govern a system 10 times the size of the UK GDP and is not the test up to now to assess equivalence.”

During last year’s Brexit negotiations, the EU granted the UK’s financial services industry a six-month extension to the transition deal, which ended on 31 December.

City bosses are braced for ministers to reject a deal should the EU maintain its demand that the UK should not change its rules independently.

Bailey’s comments will bolster Johnson’s position in talks to seal a longer-term agreement, when the prime minister is expected to argue that Brussels is behaving unreasonably when it demands a commitment to amend City regulations in line with changes to EU rules.

Bailey said the UK should take a more global view of the City’s future and seek to be involved in global regulatory bodies. He said the central bank already provided the chairs for two of the four main regulatory bodies and this put the UK in a strong position to influence industry rules.

There was a message in Bailey’s speech for Brexiters who would prefer the UK to go it alone, with the governor warning that there would always need to be compromises to create a level playing field.

“It requires us to give up some control over our standards and rules, because the alternative of narrow domestic control is illusory – it would jeopardise achieving the very things we want, safe open markets, and likewise open economies. Above all, these bodies enable us to build the trust that enable our financial systems to stay open,” he said.

“But, we do not for a moment believe that we can maintain the arrangements we have without change. As the world around us changes, so too do we have to adapt how we achieve these public goods.

“Also, we do not participate in these global institutions with the intention to water them down, misguidedly because we think this would preserve some notion of our competitiveness as a nation. The UK could not be a global financial centre for long if we did.”

Bailey’s speech came as he found himself under pressure following a dispute over his handling of the London Capital & Finance (LC&F) collapse in his previous job as the main City regulator. Evidence he gave to MPs on Monday was questioned publicly the next day by the judge who headed an inquiry into LC&F, Dame Elizabeth Gloster.
Newsletter

Related Articles

0:00
0:00
Close
U.S. Investigation Reports No Russian Interference in Romanian Election First Round
Oasis Reunion Tour Linked to Temporary Rise in UK Inflation
Musk Alleges Apple Favors OpenAI in App Store Rankings
Denmark Revives EU ‘Chat Control’ Proposal for Encrypted Message Scanning
US Teen Pilot Reaches Deal to Leave Chile After Unauthorized Antarctic Landing
Trump considers lawsuit against Powell over Fed renovation costs
Trump Criticizes Goldman Sachs Over Tariff Cost Forecasts
Perplexity makes unsolicited $34.5 billion all-cash offer for Google’s Chrome browser
Kodak warns of liquidity crisis as debt obligations loom
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Taylor Swift announces 12th studio album on Travis Kelce’s podcast after high-profile year together
South Korean court orders arrest of former First Lady Kim Keon Hee on bribery and corruption allegations
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
JD Vance to meet Tory MP Robert Jenrick and Reform’s Nigel Farage on UK visit
Trump and Putin Meeting: Focus on Listening and Communication
Instagram Released a New Feature – and Sent Users Into a Panic
China Accuses: Nvidia Chips Are U.S. Espionage Tools
Mercedes’ CEO Is Killing Germany’s Auto Legacy
Trump Proposes Land Concessions to End Ukraine War
New Road Safety Measures Proposed in the UK: Focus on Eye Tests and Stricter Drink-Driving Limits
Viktor Orbán Criticizes EU's Financial Support for Ukraine Amid Economic Concerns
South Korea's Military Shrinks by 20% Amid Declining Birthrate
US Postal Service Targets Unregulated Vape Distributors in Crackdown
Duluth International Airport Running on Tech Older Than Your Grandmother's Vinyl Player
RFK Jr. Announces HHS Investigation into Big Pharma Incentives to Doctors
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Security flaws in a carmaker’s web portal let one hacker remotely unlock cars from anywhere
Street justice isn’t pretty but how else do you deal with this kind of insanity? Sometimes someone needs to standup and say something
Armenia and Azerbaijan sign U.S.-brokered accord at White House outlining transit link via southern Armenia
Barcelona Resolves Captaincy Issue with Marc-André ter Stegen
US Justice Department Seeks Release of Epstein and Maxwell Grand Jury Exhibits Amid Legal and Victim Challenges
Trump Urges Intel CEO Lip-Bu Tan to Resign Over Alleged Chinese Business Ties
Scotland’s First Minister Meets Trump Amid Visit Highlighting Whisky Tariffs, Gaza Crisis and Heritage Links
Trump Administration Increases Reward for Arrest of Venezuelan President Maduro to Fifty Million Dollars
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
OpenAI Launches GPT‑5, Its Most Advanced AI Model Yet
Embarrassment in Britain: Homelessness Minister Evicted Tenants and Forced to Resign
President Trump nominated Stephen Miran, his top economic adviser and a critic of the Federal Reserve, to temporarily fill an open Fed seat
The AI-Powered Education Revolution: Market Potential and Transformative Impact
Chikungunya Virus Outbreak in Southern China: Over 7,000 Hospitalized
French wine makers have seen catastrophic damage to vines that were almost ready to be harvested after the worst fires in more than 70 years burned through the south of the country
US Lawmaker Probes Intel CEO’s China Ties Amid National Security Concerns
Brazilian President Lula says he’ll contact the leaders of BRICS states to propose a unified response to U.S. tariffs
Trump Open to Meeting Putin as Soon as Next Week, with Possible Trilateral Summit Including Zelenskiy
Katy Perry and Justin Trudeau spark dating rumors, joining high stakes world of celeb-politician romances
US envoy Steve Witkoff arrived in Moscow to seek a breakthrough in the Ukraine war ahead of President Trump’s peace deadline
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
×