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Brexit: What’s at Stake for the Financial Sector?

Author

Listed:
  • Jakob Miethe
  • David Pothier

Abstract

The United Kingdom's exit from the European Union will have far- reaching implications for the British financial sector. London is currently the financial capital of Europe, and the UK's financial institutions benefit from passport rights that allow them to provide their services throughout the Single Market. The UK plays two key roles in the European financial system: the first as a major hub for wholesale banking activities conducted by large European banks, and the second as a major entry point for non- European capital entering the Single Market. If the UK were to lose its financial passport rights, both of these roles would be significantly diminished. This article analyzes some of the potential consequences of the UK losing its financial passport. One possibility is that the UK will push for greater integration with offshore financial centers in its Crown dependencies and overseas territories in order to compensate for the costs of Brexit. Such a move would run counter to the EU's objectives to prevent "aggressive tax planning," and may further complicate negotiations between the EU and the UK.

Suggested Citation

  • Jakob Miethe & David Pothier, 2016. "Brexit: What’s at Stake for the Financial Sector?," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 6(31), pages 364-372.
    • Handle: RePEc:diw:diwdeb:2016-31-3
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.540806.de/diw_econ_bull_2016-31-3.pdf
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    Citations

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    Cited by:

    1. Kurecic Petar & Kokotovic Filip, 2018. "Empirical Analysis of the Impact of Brexit Referendum and Post-Referendum Events on Selected Stock Exchange Indexes," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 7-16, June.
    2. Portuese, Aurelien, 2018. "Towards a Meta Cost-benefit Analysis: The Case of Brexit," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 19(1), June.
    3. Karel Lannoo, 2016. "EU Financial Market Access after Brexit," CEPS Papers 11876, Centre for European Policy Studies.

    More about this item

    Keywords

    Brexit; European Union; Financial Sector;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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