Photographer: Simon Dawson/Bloomberg
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Brexit Predicted to Cut U.K. Financial Services Exports to EU

Brexit Predicted to Cut U.K. Financial Services Exports to EU

  • Centre for European Reform warns of possible 59% decline
  • Insurance, pension, law, accounting services would also be hit
Photographer: Simon Dawson/Bloomberg

U.K. financial-services exports to the European Union could be 59 percent lower after Brexit, even if Prime Minister Theresa May secures a free-trade agreement, according to the Centre for European Reform.

"Any arrangement that sees the U.K. leave the single market will inevitably lead to new barriers to services exports from the U.K. to the EU," the think tank’s Sam Lowe wrote in the report. "The impact of these barriers will vary by sector, with highly regulated industries, such as financial services, being more affected."

Among other industries, British exports of insurance and pension services would be 19 percent lower under a free-trade agreement, while law, accountancy and related professional services would see a 10 percent drop, the researcher said. Britain currently exports about 23.6 billion pounds ($30.1 billion) worth of financial services annually to the rest of the EU, which the think-tank estimates could fall to just 9.8 billion pounds if EU membership is replaced by a free-trade agreement.

"Any new post-Brexit barriers to U.K. services exports to the EU will have second-order negative consequences for jobs, investment and the tax take in the U.K.," Lowe wrote. "While these consequences are unfortunate, if the U.K. is to extricate itself from the single market, they should be viewed as an inevitable consequence of British political decisions."

The Centre for European Reform describes itself as a "pro-European but not uncritical" think tank.