Of the EU, an agreement must understanding of financial services

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Chancellor Philip Hammond will tell the European leaders that it is in the “common interest” to both the united KINGDOM and the european UNION to include financial services in a free trade agreement.

In a speech, Mr Hammond sets out his argument against the “sceptics”, saying that it is possible to reach an agreement.

Chief of the EU “brexit” negotiator, Michel Barnier, has argued that the agreement had never been made before.

But Mr Hammond will say that the EU has, in the past, tried to similar agreements.

In December, Mr Barnier said: “there is not a single exchange agreement is open to financial services. It does not exist.”

Mr Hammond will say on Wednesday that the european UNION itself has attempted to include financial services in trade agreements with the united states and Canada.

He will say: “If it could be done with the Canada or the united states … it could be done with the united KINGDOM.”

The Chancellor will stress: “I’m clear, not only that it is possible to include financial services within a trade agreement, but it is very much in our mutual interest to do so.”

Chief of the EU “brexit” negotiator Michel Barnier said a trade agreement, including the financial services “does not exist”

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On Tuesday, French economy minister, Bruno Le Maire told the BBC: “the Financial services may not be in a free trade agreement, for many reasons, for stability reasons, for reasons of monitoring, because there are some very specific rules for financial services”.

He said that “the best solution”, would be a system of “equivalence” where two parties have recognized each other’s standards.

But Mr Hammond will say: “It is time to respond to skeptics who say a trade agreement, including the financial services can not be done, because it has never been done before.

“I say that” any trade agreement the EU has ever done has been unique.

“The EU has never negotiated in the same way twice. He has on measurement of relations with Turkey, Canada, Singapore, South Korea, in Switzerland.”

Analysis: Kamal Ahmed, the economy of the publisher

In his speech on the united KINGDOM-the co-operation of the EU after brexit, the Chancellor will refer to past attempts to establish a free trade agreement between the united states and Europe.

“The EU itself pursued an ambitious financial services co-operation in its proposals for TTIP [the now abandoned Trans-Atlantic Trade and Investment Partnership],” Mr Hammond will say.

“That he described as a society of people who would be “more than a traditional free trade agreement’.”

Mr Hammond has argued that, if the EU tried it before with a country that does not have the harmonisation of regulation on financial services – American – then surely it can do so with a country that he does not have – the united KINGDOM.

But the Chancellor also said a lot more than that.

Because the person who has proposed the “regulatory cooperation” on financial services in the framework of the EU-US free-trade negotiations has been one Michel Barnier.

Read Kamal’s blog here.

The shadow Chancellor John McDonnell said: “The Chancellor has shown his hand, and it is clear that he is looking for a TTIP type of deal as his model.

“However, the negotiations lasted almost four years, and collapsed to the ground, this is why a transition period is essential.”

Mr Hammond will also say: “A trade agreement between the united KINGDOM and the european UNION must start from the reality of today, as our economies, including in the financial services, are interconnected, that our regulatory frameworks are the same.”

Stephen Jones, head of the directorate of Finance of the united KINGDOM, the professional body that represents the financial services sector in the UK, said: “Thousands of customers and businesses in Europe depend on access to financial services in the united KINGDOM. It is in the interest of all of this cross-border trade to continue.”