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    Brexit Threatens Growth of UK’s Financial Services, Export Sectors

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    The United Kingdom’s potential exit from the European Union poses a significant threat to the future growth of the country’s financial services and export sectors, Standard & Poor’s (S&P) said in an article Tuesday.

    MOSCOW (Sputnik) British Prime Minister David Cameron has pledged to hold a referendum on the United Kingdom’s EU membership by the end of 2017. Prior to holding the vote, he is planning to try and renegotiate the terms of the United Kingdom’s membership of the bloc. Earlier in June, S&P Ratings Services downgraded the United Kingdom's outlook from stable to negative amid the risks posed by Cameron's decision to hold an in/out referendum.

    " Brexit… poses a risk to growth prospects for the UK's financial services and export sectors… it could significantly dent the UK's current net trade surplus in insurance and financial services of more than 3% of GDP," S&P wrote, noting that the financial services sector remains a major contributor to the United Kingdom’s economy.

    The S&Ps base-case scenario is that the United Kingdom will remain part of the European Union after the referendum. In the event of the country exiting the bloc, the stability of its financial sector will depend largely on what alternative trade arrangements with European countries — such as bilateral trade agreements and membership of the European Free Trade Association (EFTA) — the United Kingdom will be able to secure.

    "While London would likely retain its global status as a leading financial center, post-Brexit the center of gravity in European financial markets could well move further toward Frankfurt, Paris, Dublin, or beyond. This trend would potentially accelerate if the UK was outside an EU free trade area or if free movement of labor were curtailed," the S&P commentary said.

    According to the analysis, even after a Brexit, London will still manage to keep most of its major strengths, such as its deep pool of international talent and legal and business service suppliers.

    However, earlier in June, a number of London’s largest companies told the Sunday Times newspaper that they had already set up committees to prepare for relocation from the UK capital should British voters opt to leave the European Union.


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