Making the Best of Brexit for the EU-27 Financial System

Andre Sapir, Dirk Schoenmaker and Nicolas Veron

No PB17-8, Policy Briefs from Peterson Institute for International Economics

Abstract: As a consequence of Britain’s exit from the European Union, UK-based financial firms are expected to lose their regulatory passport to do direct business with their clients in the EU-27. Brexit will lead to a partial migration of financial services activities from London to locations in the EU-27 to continue serving their customers there. Other London-based activities might also be relocated to non-European jurisdictions, primarily the United States. This Policy Brief focuses on the implications of Brexit for the EU-27 financial system. The authors estimate that about €1.8 trillion (or 17 percent) of all UK banking assets might be on the move as a direct consequence of Brexit. Market fragmentation—if the EU-27 receives the UK business as 27 separate jurisdictions as opposed to one single financial space—would increase borrowing costs for corporations and households, compared with an integrated market for the EU-27. Different countries and cities will naturally compete for business moving out of London. EU-27 leaders need to set clear objectives for reshaping the post-Brexit financial system. The authors recommend enhancing the role of the European Securities and Markets Authority, strengthening the banking union, and improving oversight of the EU-27’s financial system infrastructure.

Date: 2017-02
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.piie.com/publications/policy-briefs/ma ... -27-financial-system (text/html)

Related works:
Working Paper: Making the best of Brexit for the EU27 financial system (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iie:pbrief:pb17-8

Access Statistics for this paper

More papers in Policy Briefs from Peterson Institute for International Economics Contact information at EDIRC.
Bibliographic data for series maintained by Peterson Institute webmaster ().