As announced, British Prime Minister Theresa May has activated Article 50 of the Treaty on European Union this week, thereby starting the process of the United Kingdom’s withdrawal from the EU. Despite the traditional distance the British have maintained regarding the community project (the UK rebate, non-integration into the eurozone), their pragmatic nature, international vocation, experience in financial matters and, indeed, their mastery of the lingua franca, have meant that the United Kingdom played a key role that compensated for the progressive weakening of the Franco-German axis. Its departure can only be understood as a loss for everyone from multiple perspectives.
A process surrounded by uncertainties and complexities now begins, which the European financial sector is monitoring with particular concern for two reasons, among others. The first is that it is a highly regulated sector, much more so than others, which significantly increases the complexity of the Brexit negotiations. The second refers to the central role of the City of London as a community financial center, whose foreseeable loss of supremacy is already beginning to materialize. With barely two years to negotiate the United Kingdom’s withdrawal agreement, the high complexity of the process and the high degree of politicization to which it will be subjected create a landscape of maximum uncertainty. A few months ago, the central scenario, in the opinion of many observers, was to reach an agreement in 2019, followed by a transition period of several years during which a progressive adjustment to the new conditions created after the United Kingdom’s departure would occur. Although the messages sent by Theresa May and her commitment to a clean Brexit (without half-measures) have caused many to lose hope that this transition period will exist, the truth is that the Prime Minister’s letter declaring Article 50 does, however, mention the advisability of having a transition to soften the effect of Brexit and ensure an orderly process, which is sensible.
Despite the diversity of possible scenarios, many consider that Brexit will imply, in any case, that the United Kingdom becomes a third country for the EU, and with it, British banks would surely lose the community passport that allows them to operate in the EU today with the same rights as their community peers. This could create a potential disruption of cross-border services and signed contracts. What could be expected from the negotiation to moderate these types of disruptions?
