THE financial services industry – which employs around 15,000 people in Dorset – is waiting to see whether chancellor Philip Hammond can get it covered in a free trade deal with the EU.

The chancellor was rebuffed by the European Union yesterday when he claimed it was in the “mutual interest” of both parties to reach a free trade agreement that covered the sector.

Jens Holscher, head of department in accounting, finance and economics at Bournemouth University, said there was little incentive for the EU to strike a deal because Britain had a surplus in financial services.

“The EU wouldn’t benefit from it. There’s not a mutual interest,” he said.

“Financial services is not part of any free trade agreement. The EU, particularly driven by the City of London, tried to get it into the free trade agreement with the United States when that was still on the agenda. There was no interest in the US for free trade in financial services,” he said.

Prof Holscher said property prices were already rising in Frankfurt as firms including Goldman Sachs prepared to move services there.

“The private sector in financial services is anticipating this anyway,” he said.

He suggested JP Morgan, which employs 4,000 people in Bournemouth, would move some services abroad. “If they move parts to the EU – it could be Frankfurt or – Dublin that’s going to be affecting us,” he said.

But he said the effects could be limited because the Bournemouth operation dealt with back office functions rather than trading. “I wouldn’t be too worried about Dorset,” he added.

Bournemouth East MP and government minister Tobias Ellwood said it was possible to strike a deal covering the sector.

“The chancellor’s absolutely right to develop a new strategic partnership which entails the freest possible trade in services,” he said.

“It’s absolutely relevant for Bournemouth to ensure the biggest employers have the certainty and protection to be able to continue working in the UK with free access to Europe.”

He said a wider deal could cover financial services along with other sectors.

“When it comes to Europe we’re by far the stronger in policing, intelligence, security, pharmaceuticals, life sciences and creative industries as we’ve seen being generated in Bournemouth. To try and isolate any particular sector would be unhelpful. We need to strike a partnership with Europe where all our strengths are recognised,” he added.

“It’s in everybody’s interests to make sure we have the ability to move goods and services as freely as possible.”

Mr Hammond said yesterday: “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.”

But EU president Donald Tusk told his negotiators that the UK would have to settle for a more conventional free trade agreement.

“There’s no possibility to have some form of exclusive form single market for some parts of our economies,” he said.