Brexit and the Financial Sector

Writing two months before the UK is due to leave the EU, with currently no deal agreed between the two parties, Skinner argues that the UK financial sector will remain prosperous whatever the outcome of negotiations. He predicts that by the end of 2045 “London will be the primary European global financial centre” due to its “pool of talent, liquidity, network and platform”.

The author presents two articles by journalists, written in 2011 and 2017, to illustrate “doommongering and scare stories” by the media. In 2011, a journalist for the Guardian called for reform of the financial sector, in order to ensure Britain could become the most “populous…dynamic and richest country in Europe”. Without such changes, the journalist stated, the country’s inequality would grow. In 2017, the Evening Standard wrote that a post-Brexit arrangement with the European Union on World Trade Organisation terms could result in a loss of £20bn for the UK economy.

The author counters these reports, saying “such predictions have not come true”. He evidences this with data from the Office for National Statistics which showed that exports from the UK financial sector increased from £78bn to £82bn in 2018. He also states that projected job losses from Brexit have not materialised: around 7,500 versus 35,000.

The article ends by arguing that the UK financial sector’s current strength in the world is “nothing to do with the UK leaving Europe”. He gives examples of other financial centres outside of Europe, such as Singapore, Dubai and Hong Kong. Finally, he states that the City of London, due to its unique jurisdiction in the UK, is protected from “external interference”. He says this will ensure the City has a future as a financial centre.

Read the full article: Chris Skinner, ‘Is UK banking about to fall off a cliff?’, The Banker, 2 November 2020.

Brexit and the Pharmaceutical Sector

In this blog post, the authors discuss the challenges the UK may face in the global pharmaceutical sector at the end of the current transition period. Specifically, they raise concerns about the UK’s potential loss of influence over:

  • licensing;
  • surveillance;
  • pricing; and
  • assessing the effectiveness of new products.

The authors state that the UK Government’s current position is to pursue an associate membership with the European Medicine Agency (EMA). Under the membership, the UK would have to accept the EMA’s rules on marketing authorisation and post-market surveillance of medicine, whilst also continuing to conduct EMA-standard assessments and contributing to the agency’s costs. If the UK is not able to obtain associate membership, the Government intends to accept all EU medicinal products that meet EMA standards, without any further testing required for the UK market.

The authors argue that this arrangement could result in a “significant loss” of regulatory control for the UK’s pharmaceutical sector, which in turn could have an impact on the sustainability of the NHS.

The article presents the authors’ main concerns with the Government’s approach. They argue that the current organisation of the EMA makes the policy of associate membership difficult to achieve.

They also believe that exiting the EU regime entirely would threaten the UK pharmaceutical industry’s access to funding opportunities. Finally, they state that the UK’s interest in negotiating free trade agreements with other countries may make it difficult for the UK to guarantee comparable protections over areas such as abuse of patient rights and excessive pricing that it currently enjoys under EU law.

Read the full article: John S F Wright and Dimitrios Doukas, ‘The end of the post-Brexit transition and the global pharmaceutical sector’, Dublin City University Brexit Institute, 26 October 2020.

Brexit Negotiations

Reflecting on the final weeks of Brexit negotiations, David Henig argues that the recent actions of both the EU and the UK suggest the two sides want to strike a deal. He states that the UK had the opportunity to end talks the previous week and blame the EU for it, but they chose not to. Similarly, he says that ending negotiations without a resolution has “rarely been the EU approach to third country talks”.

The author then discusses the pressures faced by both sides. He argues that Boris Johnson may not face the pressure of a parliamentary vote on his final deal, but does face potential backlash from pro-Brexit Conservative MPs if his actions are too deferential to the EU. On the European side, Henig states that “trust in the UK is at rock bottom” and argues that this places Michel Barnier under pressure to obtain firm commitments from the UK during negotiations.

Henig then lists the areas of contention still apparent in talks, such as the level playing field principles, rules of origin for cars, and public procurement.

He states that a decision on whether to make a deal or not with the EU might be difficult for the UK Prime Minister. Henig states that if a deal is signed, Mr Johnson might be criticised for “giving way” to the EU. However, if a deal is not signed, it is unknown what impact this will have on UK industries and on calls for Scottish independence.

The article ends with a prediction that “a deal is the more likely outcome” if both sides are willing to show some compromise in those areas discussed above.

Read the full article: David Henig, ‘At last Brexit enters endgame’, The European Centre for International Political Economy (ECIPE), October 2020.