Friday, February 10, 2017
André Sapir, Dirk Schoenmaker and Nicolas Véron ''Making the best of Brexit for the EU27 financial system''
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.