The FCA’s chief executive Andrew Bailey has told City leaders why he believes the EU will strike a financial services deal with the UK.

During the ‘Future of the City’ dinner speech last night, Mr Bailey told guests there were good reasons for optimism on an agreement, despite gloom on the subject.

He also told the audience he wants the Government to secure a financial services deal by the end of March.

He cited previous attempts at a US-EU trade deal and fishing policy agreements as key reasons to believe a constructive agreement could be reached.

The Transatlantic Trade and Investment Partnership (TTIP) proposal between the US and EU envisaged open financial markets and mutual recognition of regulatory regimes, he said. Mr Bailey said the EU had “pursued a trade agreement which included provision for financial services.”

He said: “The US wasn’t ready for such a move, but this doesn’t take away from the fact that to its credit, the EU proposed such an arrangement. And what this meant was a proposal for close regulatory co-operation which could underpin broad mutual recognition and thus a commitment to ensuring open markets.

“The European Commission drafted a TTIP chapter on financial services. So, it turns out that it can be done, and moreover there is an extant proposal from the EU which could be a good starting point for UK-EU mutual recognition.”

He also cited fish’s “annoying habit” of swimming across borders for giving hope of striking an agreement for the City. His speech focused on fisheries policy at length as a template for a possible EU deal. He said fish swam across borders and so could financial services.

He said: “What is the relevance to financial services? Well, I was struck the other day to read a set of slides put forward by the European Commission on how to deal with this annoying habit of fish, which we have to assume they will continue to do post-Brexit.

“So, the European Commission in its slides suggested a fisheries agreement to maintain the status quo with reciprocal access to waters, fish stocks and markets, with respect for historic rights and quotas, seeking the highest level of convergence in management regimes and a bilateral EU-UK Partnership Agreement on fisheries.

“It's not for me to opine on fishing policy. But, the key point is that this sounds like the fishing equivalent of open financial markets. So, the moral of the story, to borrow a quote, 'You can get it if you really want'.”

He added: “If it is possible to envisage a partnership agreement on fishing based on convergence of regimes, of course it is possible to have open financial markets and mutual recognition of regulatory regimes, just as the Transatlantic Trade and Investment Partnership (TTIP) proposal envisaged.”