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Philip Hammond to tell European leaders Brexit deal for the City is in 'your interest' too

Philip Hammond is to give a keynote speech to European leaders. Credit: PA

Philip Hammond will tell European leaders that including Britain's financial services sector in a Brexit deal will be in the EU's interest as well as the UK's.

The chancellor is set to reject arguments that claim there has never been a free trade agreement which includes financial services, in a keynote speech in London on Wednesday.

In his speech, the chancellor will point out the EU had previously sought "ambitious financial services co-operation" in trade negotiations with Canada and the United States.

He will seek to highlight the interconnected nature of the UK and EU economies, with businesses and citizens depending on cross-border financial services in their daily life.

Mr Hammond's speech follows a visit to London from French economy minister Bruno Le Maire who rejected the idea of financial services being part of final Brexit deal. The "best solution", he said, would be for a system of "equivalence", where both sides recognised each other's standards.

Mr Hammond will say: "Our markets are already deeply interconnected and we have demonstrated how we can work together over the past decade as we have repaired and defended the financial stability of our continent. "If it could be done with Canada or the USA, it could be done with the UK - the EU's closest financial services partner by far.

"So 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's speech comes as Brussels seeks to set out its position for the next phase of Brexit talks. European Council president Donald Tusk is holding a press conference in Luxembourg on the draft guidelines for the future relationship with the UK.