A post-Brexit City: MPs ask the right questions

City in the morning, Westminster in the afternoon – there was a time when this was the daily routine for a number of MPs.

These days, alas, one is hard-pressed to find a parliamentarian who truly understands the Square Mile, but former corporate lawyer Nicky Morgan can claim to be one of them.

As head of the Treasury Select Committee (TSC), Morgan will this morning launch an inquiry into the future of the British economy's most successful sector – finance.

The TSC assumes the government ends up, at some stage or another, negotiating a trade agreement with Brussels and "seek[s] to conclude whether it would be in the long-term interests of the UK to align closely with EU financial rules, or to forgo financial services trade with the EU and pursue trade with other third countries".

A blunt and pertinent question.

"The UK may converge, seek equivalence, or diverge from the EU," it adds.

Financial lobby groups have been actively trying to answer the same question for some time now. In the summer of 2017 TheCityUK and PwC argued that the sector could generate an extra £43bn for the economy by 2025 if its post-Brexit financial roadmap was followed, a plan that involved sensible measures such as tax simplification and a far more liberal visa scheme enabling young talent to flock to London's globally-renowned fintech sector.

Its proposals reminded us that there is a sensible and lucrative middle-ground to be pursued between the ideological extremes of "Singapore on steroids" (a bonfire of regulations and slashing of taxes) and Brussels lapdog (falling into line as rule-taker).

While many EU rules were formed in the UK and contribute towards a worldwide reputation for high quality financial and professional services, there will always be room for improvement. Tweaks to Solvency II, Mifid II, et cetera, can lift London's global standing without compromising its reputation or triggering a "race to the bottom".

Moreover, once out of the EU, there is no reason for the City to bend to the whims of banker-bashing MEPs (think bonus cap, Tobin tax, and so on).

And the Bank of England cannot be expected to maintain responsibility for the world's leading financial centre while assuming the role of a rule-taker.

The Treasury Select Committee should be applauded for asking difficult questions about the City's relationship with Brussels post-Brexit. Let us hope it is equally bold and imaginative when it comes to write its conclusions.