The Organisation for Economic Co-operation (OECD) have released their 2017 Business and Finance Outlook report which includes advice on Brexit, advising the European Union to seek a pragmatic approach to the City of London and its financial services sector following its departure from the bloc. It said that there would be ‘ample room’ for the EU to trade with the City of London following Brexit—but this may rely on the UK and the EU completing negotiations on good terms.
Excluding Britain from the financial services market would not only significantly harm the EU’s economy, starving it of the vital funds it needs to prosper, but will have ramifications on a global scale, too. The OECD 2017 Business and Finance Outlook report said that ‘Erecting new barriers to financial services in the post-Brexit environment will not be in the collective interest of the global economy, where London plays such a key role in international banking, bonds and foreign exchange.’
The OECD comprises of 35 government members from around the globe including the EU and Britain. All of the members have agreed to the Code of Liberalisation which states that, ‘Under the Code, an adhering country is entitled to benefit from the liberalisation of other adhering countries regardless of its own degree of openness.’ This means that if all members adhere to the code, then trade can technically continue without impingement—including continued trade of financial services between the UK and the European Union following Brexit. The OECD’s codes of liberalisation ‘should present no legal barriers’ to the financial services industry post-Brexit. The OECD 2017 Business and Finance Outlook document states that, ‘unless UK and EU financial services regimes diverge significantly after Brexit, it can arguably be expected that the UK would benefit from the sort of selective recognition arrangements provided for by the codes.’
The UK is still forecast to be on top in the global finance trade despite Brexit, say economists. London’s prominent financial district has taken decades to cultivate and progress in terms of talent and financial and professional services. Besides which, a favourable time zone, use of a universal language and personnel expertise make the City of London the biggest financial hub in the world. Unpicking this network and relocating elsewhere in Europe would actually be incredibly difficult to do.
The OECD 2017 Business and Finance Outlook report which includes advice on Brexit is a document outlining analysis on factors that may affect the future of global business and investment.
Further reading: TRADE WITH TURKEY