Britain's finance minister Philip Hammond has urged for continued collaboration between the U.K. and European financial services businesses as Brexit talks enter into their second day.
In his annual Mansion House address, Hammond sought to reassure City of London leaders that U.K. businesses could continue to operate with the EU while it establishes its new relationship outside of the union.
Though backing Prime Minister Theresa May's plans for a hard Brexit, Hammond called for an "implementation period" that would remove the risk of a "cliff edge" departure, which could damage business.
The financial services sector should be central to this, he said, citing its "crucial" role in daily life. The U.K. is currently the EU's biggest financial market.
"Let me be clear about this," Hammond said Tuesday. "Fragmentation of financial services would result in poorer quality, higher priced products for everyone concerned.
Under EU passporting rules, all banks and financial services companies registered in the EU or European Economic Area (EEA) are free to trade with one another with little EU regulation. This is the foundation of the EU single market for financial services. However, this benefit will be at risk if the U.K. government pursues its goal of leaving the single market, prompting concern among businesses.