Friday, February 10, 2017

André Sapir, Dirk Schoenmaker and Nicolas Véron ''Making the best of Brexit for the EU27 financial system''

1 Introduction

London is the financial hub of Europe, providing corporate and investment banking services to the European Union’s 28 member states and well beyond. In a scenario in which the United Kingdom leaves the EU single market by the spring of 2019, UK-based financial firms would lose their passports to do direct business with EU27 clients. Brexit would thus lead to a partial migration of financial services activities from London to the EU27 (EU minus UK¹) so that financial firms can continue to serve their customers there. Some activities might also be relocated to other jurisdictions, primarily the United States (New York)². The next section discusses the orders of magnitude involved for wholesale banking, a crucial market segment. It should be noted that our estimates throughout this paper are for the purposes of illustration and debate, and not intended as forecasts.

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