This study, which is prepared by Policy Department A at the request of the ECON
Committee, addresses the implications and economic impact of several scenarios
of the UK leaving the EU in relation to financial services, ranging from a ‘hard Brexit’
without any arrangements concerning financial services to the current state of affairs
under the terms of a full EU membership. Special focus is put on a peculiar
variation of ‘hard Brexit’, which are the third-country regimes in the current EU
secondary legal framework that allow partial access to the EU single market based
on ‘equivalence’ on the basis of decisions by the European Commission or national
authorities. The study presents these regimes and the extent to which they were
already used in the past. The economic analysis looks at three variations of ‘hard
Brexit’ (one, in which the access to the single market is closed, one with partial
access based on equivalence and one, in which the City of London is transformed
into an ‘offshore financial centre’) and at the scenario, in which the UK joins the
EEA. The economic assessment is based on the current state of affairs in relation
to the interwovenness of financial services in the EU28 including a closer look at
the importance of UK-based clearing of Euro denominated trades