Brexit, Covid-19, and Possible Frameworks for Future UK/EU Financial Governance Cooperation

Area of Science:

• Political Economy
• International Relations
• Financial Regulation

Background:

• The European Union (EU) is navigating a critical juncture marked by shifting intra-EU alliances post-UK departure, fragmented financial markets, and stalled Banking Union completion.
• The confluence of Brexit negotiations and the COVID-19 pandemic has exacerbated economic strains globally, creating a 'polycrisis' for the EU.
• These challenges prompt fundamental questions regarding the EU's future trajectory and its global role.

Purpose of the Study:

• To analyze the critical debates surrounding future UK/EU policy cooperation in financial governance within the context of the EU's polycrisis.
• To underscore the significance of the financial services sector for both the UK and the EU economies.
• To examine potential institutional frameworks for future cooperation and advocate for a functional arrangement.

Main Methods:

• Qualitative analysis of the current geopolitical and economic landscape affecting the EU.
• Review of existing EU/third country association agreements as precedents.
• Examination of institutional options for UK/EU financial governance cooperation.

Main Results:

• The UK's departure and the pandemic have created a polycrisis, impacting EU financial markets and alliances.
• The financial services sector remains crucial for both the UK and the EU.
• Existing EU/third country agreements offer a model for a functional UK/EU financial governance cooperation framework.

Conclusions:

• A functional arrangement for future UK/EU financial governance cooperation is feasible by adapting existing models.
• Such an arrangement could foster closer UK/EU cooperation than currently anticipated.
• Proactive policy cooperation in financial governance is essential for navigating the post-Brexit landscape.