Question

Should the EU continue to give British financial firms access to the EU's market? What might happen to London if this does not occur. How will this affect the US?

Answer 1

Solution)
One might be forgiven for thinking that the debate on the future of financial services in Europe after Brexit is only the reflection of a struggle to win business on both sides of the Channel.The reality is somewhat more complex. Beyond the unsurprising confrontation between different economic interests, this debate has several other dimensions that need to be brought together to get a sense of where the European financial services industry is headed. Six different layers of economic issues interact and influence each other, making the complete picture not straightforward to fathom:
At country level
1) Competition accross the Channel between large EU 27 cities (Amsterdam, Dublin, Frankfurt, Luxembourg, Milan, Paris…) and London to attract business. London does not want to see business go away and EU 27 large cities are keen to attract the business that will have to leave London because of Brexit;
2) Competition within the European Union between EU 27 cities (Amsterdam, Dublin, Frankfurt, Luxembourg, Milan, Paris…) to attract the firms leaving the City of London.
At firms level
1) Competition between private firms offering financial services that see, depending on the position they are in today.Brexit as a threat of losing existing business or as an opportunity to win new business
2) Firms currently based in London looking to protect their interest which, facially, looks similar to the interest of London but includes also the possibility to relocate out of London if and when it becomes a condition not to lose business (with a tactical dimension of City firms that are hiding their game to UK authorities in order to avoid annoying them whilst preparing to relocate if and when it becomes unavoidable).
At decision-making level
1) Economists, business leaders and policymakers asking themselves whether the EU 27 economy will be able to access the financial services it needs after Brexit, in a context where a significant part of wholesale financial services is provided today to the European economy by London-based firms;
2) Financial regulators and supervisors caught between their two traditional, and often difficult to reconcile, missions of overseeing the financial system for the public good and promoting the interest of their hom
The battle for financial leadership
London’s determination to maintain its financial leadership is understandable given the importance of the City of London's business for the UK economy.
Considering the economic significance of financial services, it is no surprise to see London and the UK fighting to preserve the related business and other cities from EU 27 countries competing to attract it.
The loss of EU financial passports for London-based firms
The know whether the loss of the so-called European financial passport for London-based firms is inevitable has been asked since the result of the June 23rd 2016 referendum. Some voices have also expressed the possibility of negotiating a special deal for the City of London to access the EU single market. A European passport is an authorisation granted by the financial regulator of a member state that is valid throughout the Union. By definition, an authorisation granted after Brexit by a British regulator will not be granted by a regulator of a member state, since the United Kingdom will have left the European Union. Therefore, such an authorisation will not be deemed a European passport.
Large EU 27 cities are competing to attract business
This is a simple case of competition to win business and the main contenders are: Amsterdam, Dublin, Frankfurt, Luxembourg, Milan and Paris.
The parameters on which competition will operate are:
the pre-existence of a varied financial ecosystem,
the local pool of talents required to operate,
political stability,
labour law,
the characteristics of the local tax system,
the quality of national regulators,
real estate capacity,
the international dimension.