Prime Minister Andy Burnham's government will not accept so-called dynamic alignment of Britain's financial services rules with those of the European Union, Bloomberg reported on Tuesday, a stance that sets a clear limit on his ambitions for a closer relationship with Brussels.
Under dynamic alignment, Britain would automatically follow EU regulations in certain areas. But as ministers seek to preserve the City of London's independence, the Burnham government does not want the mechanism to apply to financial services, British officials told Bloomberg. They spoke on condition of anonymity because the talks are ongoing.
Britain's Labour government is in talks with the EU on closer ties that may include alignment in sectors such as agriculture and energy. But British officials have told their EU counterparts that applying dynamic alignment to financial services is a red line they are unwilling to cross.
Burnham is maintaining the position held by his predecessor Keir Starmer's government, which exempted financial services from a push for closer alignment with the EU. Dynamic alignment on financial services was not included in a paper of common understanding agreed between Starmer's administration and the EU in 2025.
The City itself has resisted a return to Brussels' rulebook. A paper published by the trade body UK Finance in June said it did "not support wholesale UK alignment or dynamic alignment with the EU in financial services." Anand Menon, director of the UK in a Changing Europe think tank, told Bloomberg that the Bank of England and the Treasury would always be likely to oppose such a move.
The decision matters for any deeper rapprochement: if Burnham were to try to take Britain back into the EU or join its single market, as he has said is possible, he would likely have to sign up to its rules governing financial services. The question now sits alongside preparations for a Brexit reset summit on November 20, where a leaked EU draft joint statement is also expected to cover food trade, energy and youth mobility.
