FINANCIAL SERVICES

If this deal cannot be passed through the UK Parliament, the next best option is to seek regulatory alignment in the financial services industry so that equivalence can be applied. This arrangement may minimise the disruption to trade in the sector.  The European Union’s post-Brexit reckoning with financial markets, Breugel, May 2020May 2020. Raise the alarm through the local paper and write to your MP  http://www.onecrisisatatime.co.uk/sample-letters/

The potential impact of a no-deal Brexit on financial services

Compiled by Hania Orszulik

    • Financial services account for the largest proportion of UK service exports (£21.7 billion in 2018). It is essential for the UK government to secure a deal that enables the sector to limit the damage caused as a result of leaving the European Union. Such damage limitation would include enabling the sector to retain some of its competitiveness, minimise job losses, and continue to contribute large amounts of tax revenue to the UK treasury. SOURCE: International trade in services, UK:2018 Office for National Statistics
    • A no-deal scenario would mean tariff and non-tariff trade barriers on services, which would inevitably lead to a reduction in exports of financial services. Businesses investment would be attracted to more competitive markets abroad which have access to the single market. As a result, foreign direct investment and business investment are expected to be significantly reduced.  With reduced business activity in the financial sector, we can then expect job losses in the industry and significantly lower tax contributions to the treasury. SOURCES: Industry and regional effects of a no-deal Brexit, Briefing, ESRC, 12 September 2019 | Brexit will hammer Britain’s financial services – and no-one seems to have noticed, Lorenzo Spoerry, Politics, 2 May 2019

If everyone in the world believed in the free market as a matter of religious faith Britain might have a chance. But that’s not how trade negotiations work… and that’s why Britain as part of a European market of 500 million has passed some very successful trade deals with more than sixty other countries.” Professor Ngaire Woods is dean of the Blavatnik School of Government, and Professor of Global Economic Governance at the University of Oxford. Brexit UK’s position in Trade deal negotiations, YouTube, 21 June 2016

  • Given the significance of the financial service sector as a proportion of UK industry, the government should secure a ‘good’ deal with the EU as promised by the Prime Minister during the 2019 election campaign. Leaving full EU membership aside, a ‘good’ deal would include the continuation of the highly valuable ‘passporting’ principle, which allows financial services to perform cross-border operations free from tariffs and barriers. This system is essential for our financial services industry to continue its exports with limited disruption and to maintain some competitiveness in the market. SOURCES: The European Union’s post-Brexit reckoning with financial markets, Rebecca Christie and Thomas Wieser, Breugel, May 2020 | What no deal Brexit means for the UK’s financial services firms, Dr John Paul Salter, UK in a Changing Europe, 27 February 2019
  • In order to maintain this highly advantageous system, it is necessary for the deal to include continued membership of the customs union and single market. There is no democratic justification for rejecting this opportunity. In fact, the Leave campaign repeatedly dismissed warnings of losing these EU benefits as ‘project fear’. Brexit was about leaving the EU, not the single market. SOURCE: Staying in or leaving the EU single market, Brexit Quick Brief #1, BBA, 2016
  • If this deal cannot be passed through the UK Parliament, the next best option is to seek regulatory alignment in the financial services industry so that equivalence can be applied. This arrangement may minimise the disruption to trade in the sector. However, equivalence would not guarantee the same stability to financial firms as passporting because, differently from the latter, it can be unilaterally revoked at a very short notice. This will most likely still lead to job losses and reduced investment in the sector. SOURCE: The European Union’s post-Brexit reckoning with financial markets, Rebecca Christie and Thomas Wieser, Breugel, May 2020

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