Abstract
Brexit has far-reaching consequences for Europe and the European single market for financial transactions. In particular in this field, the UK has had a strong influence in drafting European policies and legislation as the City of London has acted as the financial hub in Europe for several decades. As a result, the UK has spearheaded the call for more market friendly legislation with the support of some other EU member states. This went against the wishes of several other EU member states, where a stronger rule-based approach to financial markets was strongly preferred, in particular after the financial crisis clearly demonstrated weaknesses in the macroeconomic oversight of European financial markets. With the UK leaving, the call for more stringent legislation will gain momentum as the political leadership among the remaining 27 EU member states will shift and might be looking to curtail the long-standing dominant position of the UK in the field of financial industries. In this light, several leaders of EU27 member states have already voiced their support for their nations’ financial hub to become the next City of London. This would lead to a substantial change in leadership in European finance post-Brexit. This contribution assesses the impact of Brexit on the changes in political leadership on the governance of European financial markets, as they might ultimately be reflected in the institutional outcomes and policies.
Highlights
On 23 June 2016, the citizens of the UK decided through a referendum vote to leave the EU
This article adds to the literature by looking into the two dimensions of leadership: Ideational leadership and coercive leadership and studies how they impact the governance of EU single market for financial services after Brexit
In order to assess the impact of Brexit on the governance of EU finance, this article builds upon scholarly work, and related publications, such as report and public statements
Summary
On 23 June 2016, the citizens of the UK decided through a referendum vote to leave the EU. The result is that over time the City of London came to substantially outsize other European financial hubs in terms of foreignregistered monetary financial institutions, making it the main international finance hub in the EU It is the place where most EU area and third country institutions (mostly headquarter in the US and Switzerland) have set up a large presence, as foreign financial firms currently benefit from the fact that the UK license gives them access to a European passport (see Schoenmaker, 2017). Part IV of the political declaration setting out the framework for the future relationship between the EU and the UK refers to financial services, but gives little indication on what the future relationship may look like in this field It states that “the Parties are committed to preserving financial stability, market integrity, investor and consumer protection and fair competition, while respecting the Parties’ regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest”
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