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ECONOMY
at annual level, the GDP will reduce center, but it also has a globally im-
between 0.5 and 1.5%. The reduction portant role considering that it is the
of the GDP is expected to last until main global market for several finan-
the reestablishment of the free trade cial products where the global banks
agreements with the rest of the world, trade. Therefore the decision to leave
which should be followed by a period of the EU will probably reflect on the lo-
recovery which is expected to be long cation, the liquidity and the costs of
and to have long-term implications for the financial services, not only in Eu-
the real GDP level, which cumulatively rope, but also globally. The financial
is expected to reduce between 4% and sector employs 1.2 million people, that
6% compared to the realized GDP in is, it creates 3.9% of the total number
2015. of job positions, while the contribu-
tion of this sector in the formation of
The EU membership provides this the GDP is 7.9%.
country access to the greatest com-
mon market of the world which com- Hence, the exit from the EU is ex-
prises of approximately 500 million pected to cause tectonic changes in
residents and an estimated value of the London, considering that most global
GDP of approximately 13 billion Euros. banks are expected to make funda-
The conditions under which the banks mental changes in their business mod-
with a seat in the United Kingdom ac- els and operative structures through
cessed the other markets, are regu- restructuring of their operations. This
lated with the free trade agreements is expected to have important implica-
signed between the EU and about sixty tions on the employment in the finan-
other countries in the world. Although cial sector, however also in the other
the United Kingdom has ratified these service sectors that have important
treaties, their applicability in the contributions both in the creation of
United Kingdom is conditioned by its job positions, but also in the forma-
membership in the EU. tion of the GDP. The global banks with
a seat in London, after the eventual
London currently is the main inter- decision to leave the EU, will have to
national financial center in the EU. conduct complex analyses whether re-
The cross-border lending of the banks structuring would be required of the
in the United Kingdom covers 17% of way their operations function. This
the total international cross-border to a great extent would depend on the
lending, compared to France and Ger- way and the speed of regulations of
many, which participate with only 9%. the relations with the EU, as well as
London, being the main financial cen- whether the United Kingdom will stay
ter in the EU, for decades dominates in within the EEA or not. In this context,
the so called wholesale financial ser- one can also understand the state-
vices market, including here the lead- ments of some executive directors of
ership position of the currency mar- the global banks that warn that the
ket, being the largest financial center exit from the EU will cause mass dis-
in the world where trade with Euros placement of the financial market, and
takes place. The fact that the total re- it would be a reversible process which
ceivables of the banks with a seat in will stop the several-decade growth of
this country from the so called EU 15 the global banks in London. Regardless
group of countries are an amount of of the probability to reallocate part of
more than 1 trillion Euros show that the global banks in the other financial
the United Kingdom is strongly inte- centers in Europe, one can hardly be-
grated in the European financial sys- lieve that any of them can replicate
tem. The exposure in reverse direction the synergies and benefits which are
is even greater and it is estimated in offered today by London’s ecosystem,
an amount of 2 trillion Euros. Lon- created to support the functioning of
don is not only a European financial
58 July-August 2016
