UK to leave the EU - Could it really happen?

User id CG3	August 18th 2014
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UK TO LEAVE THE EU - COULD IT REALLY HAPPEN?

There has been news in the Financial Times (FT) today that the international banks are preparing to leave London.

The UK stands to lose approx $23.6 Billion of its financial services trading surplus if this happens, with the business most likely moving to Frankfurt or Paris. Ireland are pushing hard to attract the banks, emphasising their low taxes and English language advantages.

Some of this is already happening - the European Central Bank (ECB) has ordered that transactions denominated in Euros must be executed within the Eurozone. The UK is appealing this at the European Court of Justice ( ECJ ), but if they lose some relocation of international banks to the Eurozone is inevitable.

Can London continue as the dominant provider of financial services if we leave the EU? Even if we stay within the EU but remain outside of any future banking union would we still lose our dominance?

A back of the envelope calculation seems to indicate the UK could potentially lose just under 1% of its GDP.

Given that historical growth rates for the last twenty years average around 1% a year this is way more significant than it might sound!