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 The Post-Brexit Restructuring of Financial Services in the EU27


Denis BEAU * First Deputy governor, Banque de France. Contact: denis.beau@banque-france.fr.

Brexit was not just a major political upheaval, it has also led to profound transformations in financial services due to their importance for the smooth functioning of the Europeans and British economies, and to the interlinkages between them. Furthermore, for the European Union, Brexit is without doubt an unprecedented opportunity to assert its financing autonomy, increase its resilience with a polycentric financial system relying on european market infrastructures and establish itself as a leader in innovation. However, this does not mean a step back from ties and dialogue with the United Kingdom: a close coordination with British authorities, especially in areas of regulation relating to systemic or global risks, is of the ultmost importance to avoid fuelling the risk of harmful regulatory fragmentation.

The United Kingdom's (UK) exit from the European Union (EU) – or Brexit – which was decided following the referendum on 23 June 2016, was not just a major political upheaval, it has also led to profound transformations in financial services due to their importance for the smooth functioning of the EU and UK economies, and to the interlinkages between them. With the departure of the United Kingdom, the EU has lost a major component of its financial system, and its share of the global financial services markets has shrunk from 23% before Brexit, the second-largest in the world, to just 14% (Asimakopoulos et al., 2021). While financial services still account for a sizeable share of the United Kingdom's economy (8.6% of GDP, or close to GBP 164.8 billion in 2020) and make a large positive contribution to its external trade balance (the…