Abstract
The EU project is at an inflection point. Intra-EU alliances are altering in light of the UK’s departure, the EU’s financial markets remain segmented, and there is limited appetite for completing the Banking Union. The second stage of the Brexit negotiations also collided with the Covid-19 pandemic, a medical emergency that has placed economies around the world under tremendous strain. This combination of issues amounts to a ‘polycrisis’ for the EU, aspects of which raise existential questions about the future of the EU project. This article focuses on one strand of the debates generated within this polycrisis: future UK/EU policy cooperation with respect to financial governance; or the mechanisms which support financial market regulation and supervision. The article discusses the importance of the financial services sector to the UK and the EU, and examines potential institutional options for future financial governance cooperation. In particular, the article advocates harnessing the dexterous aspects evident within precedents, including in existing EU/third country association agreements, to develop a functional arrangement for future financial governance cooperation. Such a framework could also lead to closer UK/EU cooperation than currently appears likely.
Highlights
The EU project is at an inflection point
The second stage of Brexit negotiations collided with the Covid-19 pandemic,which has strained economies around the world.These issues amount to a ‘polycrisis’ for the EU, raising existential questions about its future
The questions generated by the confluence of Capital Markets Union (CMU) and Brexit can be boiled down to how open the EU capital markets should be to the world post-Brexit, or whether it should preserve the status quo to gain a competitive advantage over the UK.[81]
Summary
The EU project is at an inflection point. Intra-EU alliances are altering in light of the UK’s departure,[1] and the EU is grappling with a constellation of crises, including the continued fallout from the financial and eurozone crises, which has spawned populist movements in some Member States. The article considers three potential institutional options for future UK/EU financial governance coordination over the longer term based on the adoption of common standards It explores the creation of a joint financial governance committee; the development of bilateral and mini-lateral alliances (that could offer the UK some market access rights with respect to particular Member States); and a functional UK/EU association regarding the pursuit of a common policy on future UK/EU cooperation. With respect to bilateral and mini-lateral initiatives, the article explores the UK/Member State relationships that are emerging and suggests that further productive transnational coalitions may develop over the longer term Such arrangements could, for example, open up some aspects of Member State markets to the UK and could indirectly impact upon a future UK/EU relationship and the parties negotiating positions in respect of such a relationship.
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