2.9 It is therefore probable that it would take an extended period to negotiate first our exit from the EU, secondly our future arrangements with the EU, and thirdly our trade deals with countries outside of the EU, on any terms that would be acceptable to the UK. In short, a vote to leave the EU would be the start, not the end, of a process. It could lead to up to a decade or more of uncertainty. [...]
Case Study: The effect of an EU withdrawal on the financial services sector
If the UK were to leave the EU then the UK government would need to disentangle the regulatory framework from EU law for the financial sector. Regardless of the exit negotiations outcome this would be a large and complex task.
For most types of financial services, EU law amounts to the substantial majority of the UK’s legislative framework, whether directly applicable or EU Directives transposed into UK law. EU Directives and Regulations govern the regulation – both prudential and conduct of business of all major sectors, including banking, insurance, wholesale and retail investments, provision of market infrastructure, payment, clearing and settlement systems and a host of other activities.
One consideration for the UK Government would be how to avoid regulatory gaps in the UK’s domestic legislative framework once the EU Treaties ceased to apply. This would involve questions over how existing EU law could or should be adopted into domestic law.
Another consideration would be the status of UK firms whose existing business operations in other EU Member States were authorised under EU law, and of firms based in other EU Member States with operations in the UK.
Inside the EU, thanks to “passporting”, UK financial firms – including banks, insurers and asset managers – generally have the right to sell financial services and establish branches anywhere in the EU without other countries being able to impose different or additional requirements. [...]
Chapter 5 – conclusion
5.1 A vote to leave the EU would be the start, not the end, of a process. It would begin a period of uncertainty, of unknown length, and an unpredictable outcome. The broad procedural route is set out in Article 50 of the Treaty on European Union, ensuring exit is possible. But beyond procedure, nothing is agreed and nothing has been tested.
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