David Miles, Professor of Financial Economics at Imperial Business School, spoke at the .
The Committee put questions to David and Professor Niamh Moloney from the London School of Economics on thepotential impact of Brexit on the financial services sector.
Examining the effects from both the perspective of the UK and the European Union (EU), the discussion explored to what extent the EU relies on the UK financial services sector, how this relationship may change after Brexit and what effect this could have on UKGDP.
"I think in some areas the EU relies very heavily on UK financial services. For example, probably 60-70 per cent of foreign exchange transactions that are relevant to the euro come through London," said David, adding thata "very high percentage" of European transactions in certain types of derivatives also go through London.
He noted thesize of net exports of financial services from the UK to the EU alone is in the region of £30 billion, equivalent to 1.5 per cent of UK GDP.
David also explainedhis concerns over the potential pressure to conform to EUregulationsunder the , as well as the possibility thatfinancial centres in the EU may use Brexit as an opportunity to wrangle some financial activity away from London, which could have a knock-on effect on other industries.
"If there were to be another European centre where most of the activity does end up and it doesn't get fragmented across lots of different places, maybe the economies of scale that generates means that it really becomes a much more efficient place to do all kinds of business," he said.
However he stressed that the situation should not be overplayed.
"Ithink it's sometimes easy to exaggerate how significant all this is, economically," he said."My guess is thesituation will be lose-lose for both theEU and the UK.
"The UK will lose a little bit... say £3-5 billion a year - not good - but it's not a huge loss."
Media coverage
(Reuters)
Share
