Summary of Making the Best of Brexit for the EU27 Financial System

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The United Kingdom’s departure from the European Union will leave the remaining 27 member states to reckon with the disruptions certain to roil the region’s financial industry. According to this instructive overview from economists André Sapir, Dirk Schoenmaker and Nicolas Véron, the loss of London as the EU’s financial center could strike a blow to market efficiency, transparency and stability, given the City’s central role in financial markets both within and beyond the EU. getAbstract recommends this big-picture analysis to policy makers and economists for its view of the financial industry issues confronting the EU in a post-Brexit world.

About the Authors

André Sapir, Dirk Schoenmaker and Nicolas Véron are senior fellows at Bruegel.

 

Summary

Once Brexit occurs in early 2019, the European Union’s financial system will face significant transitional challenges. Firms based in the United Kingdom will lose their rights to conduct business directly in the EU. Some migration of UK financial services activities to the remaining 27 EU member states will be inevitable. The loss of the supervisory framework for wholesale markets provided by the Bank of England and the UK Financial Conduct Authority will force the EU27 to address and mitigate the expected problems.

Two post-Brexit scenarios are possible: A fragmentation of the industry could occur...


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