Author(s): Thomas Url
Date published: Jun 2019
SUERF Policy Note, Issue No 79
by Thomas Url, Austrian Institute of Economic Research (WIFO)
JEL-codes: E02, F33, G28.
Keywords: Brexit, City of London, financial services, financial centres.
Given the size and the relative strength of the British financial service industry, the decision to pull out of the Single Market may well have more severe consequences on financial services than on manufacturing. Brexit will create serious non-tariff trade barriers, dampening foreign trade in financial services and the local production of financial services in the United Kingdom. In the short-term, continuity of existing cross-border contracts requires bilateral transitional agreements between the European Commission, individual member countries of the EU27 and the United Kingdom. In the medium to long-term, the international nature of financial markets in the United Kingdom suggests resilience as a global financial centre but business related to the EU27 is likely to migrate due to regulatory demands by the European supervisory authorities and the European Central Bank.
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