Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Brexit: John McDonnell attacks Philip Hammond for offering 'special treatment' to the City in EU trade talks

'The time of offering special privileges has long past,' says Shadow Chancellor

Ben Chapman
Thursday 08 March 2018 15:29 GMT
Mr McDonnell said the Chancellor had “finally shown his hand” by singling out financial services in trade deal talks
Mr McDonnell said the Chancellor had “finally shown his hand” by singling out financial services in trade deal talks (Getty)

John McDonnell has criticised the Chancellor for appearing to favour the City of London over the rest of the economy in Brexit negotiations.

“The Chancellor Philip Hammond has made it clear that, far from seeking a deal that works for all, there is one part of the economy that he wants to prioritise,” Mr McDonnell said in a speech to the British Chambers of Commerce on Thursday.

“We are not cherry-picking favourite sectors of the economy for a special deal, we want a deal that works for every business, every sector,” the Shadow Chancellor said, adding that the Conservatives were taking “exactly the opposite approach”.

Mr Hammond told European leaders on Wednesday that it was in the UK and the EU’s “mutual interest” to include financial services in a Brexit trade deal.

Mr McDonnell said the Chancellor had “finally shown his hand” in Wednesday's speech.

“It is now clear that the Government’s priorities are to win a deal for the financial services first, and then worry about the rest of the economy later,” he said.

“There is no other reason to raise a specific deal for financial services... while refusing to negotiate a new customs union that would protect our manufacturing trade,” he added.

“The time of offering special privileges has long past.”

Mr McDonnell said the Chancellor had also been wrong to raise Transatlantic Trade and Investment Partnership, or TTIP - the defunct deal between the EU and the US - as a potential model for what could be attained in the Brexit negotiations.

He said: “Not only did [TTIP] include additional deregulation of the banks, just years after the financial crash, it included investor-state dispute resolution.”

This type of system allows firms to take legal action against governments if they believe their rights have been infringed. Mr McDonnell said that introducing such a mechanism would allow businesses and financiers to “strike down” government policy.

“That would leave it to businesses, not parliaments, to decide what would be allowed and what would not,” Mr McDonnell said.

“We want a financial system that works for the people and the wider economy, not only, as has often been the case in the past, for the benefit of a small group at the top of that industry.”

“It means making finance the servant not the master of the economy.”

He said the Government should spend less time tending to the needs of “rentiers and speculators” and more on those who work in and run businesses

It comes after Mr Hammond stressed the importance of a deal with the EU on the UK’s financial sector in a speech to European leaders on Wednesday.

“I am clear not only that it is possible to include financial services within a trade deal but that it is very much in our mutual interest to do so,” Mr Hammond said.

European Council president Donald Tusk swiftly rejected the idea. “No member state is free to pick only those sectors of the internal market they like, or to accept the role of the ECJ only when it suits their interest,” Mr Tusk said, shortly after the Chancellor’s comments.

Financial services contribute £124bn a year to the UK economy, according to the latest government figures. Many banks and other financial firms have already been forced to relocate some staff to the EU due to uncertainty about whether they will be able to serve their clients from London once Britain leaves the trading bloc.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in