29 Sep 2016

EU Financial Market Access after Brexit

Karel Lannoo

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Karel Lannoo has contributed a policy analysis to the Forum section of the latest issue of Intereconomics, which is devoted to the broad question of “Post-Brexit European Union”. It can be downloaded, along with other contributions on this question, at https://www.ceps.eu/system/files/IEForum52016_3.pdf

Lannoo opens his contribution by observing that it is understandable why the UK attaches immense importance to retaining access to the EU’s single market, given that financial services account for about 8% of the country’s GDP. He warns, however, that putting a mutually acceptable regime in place will take years of negotiations, and the final agreement will clearly allow much less access than UK-licensed firms enjoy today. He further finds that the “equivalence” assessment – the basic tool used under current EU financial services legislation to recognise that a third country’s legal, regulatory and/or supervisory regime is equivalent to the corresponding EU framework – offers a fairly bleak basis on which the City might continue to thrive as a global financial centre in Europe.

Karel Lannoo is Chief Executive at CEPS.