At the end of last month, TheCityUK was delighted to lead a joint delegation with the City of London Corporation to New York and Washington DC. It was great to be back on the road again in what was for many the first business trip since the pandemic began in early 2020.
The clear message from all our conversations was that the ‘golden corridor’ of financial and related professional services between the UK and US remains strong. There was also a real ambition to push for further two way trade and investment and to achieve closer regulatory cooperation around new areas of the financial services, such as sustainable finance, CBDCs and cryptoassets is needed.
There exists a ‘special regulatory relationship’ between the UK and the US. Still, the compatibility of regulatory standards must be strengthened to support growth and opportunity on both sides of the Atlantic. Our US colleagues see opportunities for the UK to benefit from being outside the EU, especially in new areas of growth where it can respond more nimbly. To do so, they think the UK needs an agile, proactive, and responsive trade and regulatory regime.
This highlights the importance of the UK’s Future Regulatory Framework Review, and the absolute need for the new regulatory objective on supporting growth and international competitiveness. It is not just the regulatory rules that matter, but how effectively they are implemented and how responsive regulators are to the needs of market participants.
We found agreement that the UK/US Financial Regulatory Working Group (FRWG) needs to be strengthened, with more opportunity for meaningful business involvement and a sharper focus on outcomes. Equally, there is a sense that an obstacle to progress has been the failure of industry (thus far) to galvanise behind a shared transatlantic “ask” which is sufficiently focussed, forward-looking and granular to be acted on by administrations on both sides of the Atlantic.
Sustainability came up as a key topic in many meetings. Despite the deeply polarised political view of climate issues in the US, investor sentiment continues to drive the industry toward more sustainable investment. There is consensus that the US and the UK are natural partners when it comes to the development of a green taxonomy. This would not only support a shared transatlantic vision - as the two leading international financial centres, the US and the UK could draw in other markets which are looking for an agile, principles based approach.
Emerging legal and regulatory frameworks in the field of financial innovation were identified as a common ground between the UK and the US, with a particular emphasis on a safe but accommodating regime for AI and DLT applications, underpinned by a shared vision for operational resilience, data, and cybersecurity.
There remains a strong appetite for the ongoing liberalisation of trade and investment between our two markets. Finding ways to continue the trade dialogue outside of formal FTA negotiations, ensuring our investment screening regimes are responsive and working closely at the state level to progress issues like mutual recognition of professional qualifications were strong encouraged.
The Washington leg of our trip coincided with the start of Russia’s invasion of Ukraine. United in condemnation, we saw renewed determination for the UK and US to collaborate even more closely in the future, underlining the strategic importance of the relationship and the value of meeting in person and working multilaterally to address issues of global significance.