Five years on from Brexit, cross-border financial flows between the UK and EU still account for a significant part of overall financial activity in both markets, according to a report from Global City.
The report highlights that both markets face similar challenges, from security, climate change and demographic shifts to poor economic growth and investment. Since 2015, cross-border banking activity between the UK and EU has increased from an EU point of view, but decreased from a UK point of view, and cross-border investment activity has generally scaled down. However, although the UK overall is a more international market than the EU, activity between the two accounts for a significant share of the total activity of both.
While accepting the reality of the post-Brexit connection between the UK and EU, the report makes the following directional recommendations to encourage closer cooperation between the markets:
- Focusing on incoming regulations and measures to foster a closer relationship;
- Technical improvements and reforms that make a difference but do not cause political issues – such as the UK-EU-Switzerland agreement to shorten the settlement cycle to T+1 in October 2027;
- Improvements to non-financial material matters, such as the UK rejoining the Erasmus+ programme and the two markets agreeing a comprehensive youth mobility and experience scheme, simpler provisions for short-term business visitors, and better mutual recognition of professional qualifications;
- Taking a wider perspective and finding common ground on technical, regulatory or policy areas; and
- Utilising the unique window of opportunity presented by a more uncertain geopolitical environment globally.