What will be the World’s First Post-Brexit Financial Center?

Brexit, apart from all the other impacts on Britain’s economy, will significantly cloud London’s Citi leadership as Europe’s top financial centre and one of the world’s biggest, along with Wall Street in the top spot.

It is a given that New York will become the world’s first financial centre. As for the EU, surely its new financial centre, and after Britain’s departure, it will become directly competitive with the New York financial centre. Will be Frankfurt this top EU financial centre? Will it be Paris or Dublin? European financial regulators together with time will answer this question.

by Thanos S. Chonthrogiannis

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The economic consequences of Brexit

The EU will experience the consequences of Brexit in the long run and this is because Britain will continue to pay contributions to the EU budget up to £33bn. At the same time, this facility, which is achieved to the EU’s 27 most member-countries, will enable the EU’s share of global GDP to fall from 22,1% to 18,8% in their state budgets.

At the EU summit on 20th February 2020, the issue of Brexit and its economic consequences in the EU budget will create a new upheaval as the EU’s new seven-year financial-budgetary framework is discussed.

But the upheaval will continue to exist if it is on the negotiating table of what kind of trade deal will apply between the UK and the EU after the completion of Brexit.

Based on economic statistics over the past seven years, around less than 50% of UK exports were directed exclusively to the EU. At the same time, most of the EU’s exports ended up in the UK.

If the logic of a hard Brexit prevails, which is a very likely scenario and given the USA’s unwavering support for the UK to absorb the bulk of its exports, then EU will imposed tariffs on UK products and services that could exceed €6bn per year. It is therefore given the start of a hidden trade war between the EU and the UK.

The future of the EU and the UK after Brexit

The EU member states with the highest proportion of exports to the UK is Germany. A slump in its export volume and given the China-EU trade war over control of 5G in the EU, Germany will lead to a deep economic downturn, forcing the German government to increase its public spending to offset a drastic decline in its exports.

In fact, Germany will lead to a review of the size of its financial assistance to the European Community budget by transferring more financial weight to the annual budgets of the other EU member countries. This is also due to the upheaval caused by the possibility of a hard Brexit prevalence in EU member countries and which British Prime Minister Boris Johnson uses as a bargaining chip.

For the UK, the cost of Brexit will exceed $280bn up to the UK’s full exit from the EU. Such a frightening amount will drastically increase the British government’s public debt, then forcing all future British governments to implement policies to curb their public spending and increase the tax on the economy as a whole, necessarily putting pressure on any growth rates that the British economy will certainly present.

Growth rates that to sustain will require low-level taxation, including to attract investment from abroad. Those growth rates in order to sustain will require low-level taxation apart anything else, in order to attract investment from abroad.

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