Teaching Comparative Government and Politics

Friday, October 28, 2016

Brexit is complicated

Superficially, getting the UK out of the EU might seem as simple as voting in a referendum. Not so. Here's one complication.

Banks poised to relocate out of UK over Brexit, BBA warns

Large banks are getting ready to relocate out of the UK early next year over fears around Brexit, the British Bankers' Association (BBA) has warned.

Writing in The Observer, its boss Anthony Browne also says smaller banks could move operations overseas by 2017.

"Their hands are quivering over the relocate button," he wrote. Most banks had backed the UK remaining in the EU…

"Banking is probably more affected by Brexit than any other sector of the economy, both in the degree of impact and the scale of the implications," he told the newspaper.

"It is the UK's biggest export industry by far and is more internationally mobile than most. But it also gets its rules and legal rights to serve its customers cross-border from the EU."…

Banks want to see the continuation of the EU's "passporting" system, allowing UK-based financial services to operate across Europe without needing separate authorisation…

Analysis: Joe Lynam, BBC Business correspondent

One of the perks of Europe's Single Market - which also currently includes the UK, Norway and EU countries such as the Netherlands - is "passporting". Passporting allows banks and insurance companies to sell their services anywhere in the single market without having to establish a base in every country in Europe.

But single market membership comes with conditions: freedom of movement of goods, services, capital and (crucially) people. Theresa May has already said she intends to restrict the free movement of people from the EU after Brexit, while EU leaders have meanwhile said the four freedoms are indivisible ie non-negotiable.

That means the UK may have to quit the single market and lose passporting. What Anthony Browne from the BBA is doing is upping the ante on the government, by saying some banks will start to relocate in the coming months without passporting...

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