UK to lose its financial sector status on hard Brexit? - Nomura

The hope of “passporting” financial services from the UK into the EU has been slowly fading for some time, especially after Theresa May presented her Brexit plan. 

Key Quotes:

"Over the next two years or so the industry will need to execute its post-Brexit plans based on the EU’s “third country regimes” and what “equivalence” the UK could enjoy (or lack) in a MIFID II regulatory environment."

"Both of these may encourage financial institutions to relocate part of their business from the UK to the EU if it is to be a “clean break” Brexit. If foreign financial institutions relocate around 20k UK finance jobs, or nearly 10% of their UK business, we estimate £25bn divestment by foreign institutions is possible. If domestic institutions also decide to relocate, the impact could be even bigger."

"The UK current account balance could also weaken after the divestment, as a large part of the UK service balance surplus comes from the finance sector. The balance could weaken by £5-10bn annually."