What Brexit might mean for the UK financial services sector? (CSFI/CEPS Joint Roundtable)
The panellists backing the Brexit indicated that London would continue to thrive even outside the EU due to its own unmatched competitive advantage. Financial services represent up to 1/10 of the UK’s GDP while no other European financial centre comes close to London. The UK alone would also be in a better position to shield its financial industry from ill-suited and burdensome financial regulation emanating from Brussels. More generally, the real achievements of EU membership for the UK were put into question. The panellists supporting the continued EU membership strongly dismissed these arguments. In their view, the UK should aim to steer the EU reform and exercise its influence from the inside not by remaining on the sidelines. Undoubtedly, a financial centre like the London needs to keep its access to the EU’s internal market. Nonetheless, it is highly unlikely for the UK-based financial institutions to retain their current “passporting” rights. Also, a post-Brexit UK financial regulatory regime would require to be deemed equivalent to that of the EU. One panellist argued that the effect on the UK as a fund domicile is going to be limited but that the UK-based fund managers might be confronted with bigger challenges due to potential changes to a number of relevant rules.