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1. Resilience or Relocation? Expectations and Reality in the City of London since the Brexit Referendum

Author:
Manolis Kalaitzake
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The fate of British finance following the Brexit referendum revolves around the “resilience or relocation” debate: will the City of London continue to thrive as the world’s leading financial centre, or will the bulk of its activity move to rival hubs after departure from EU trading arrangements? Despite extensive commentary, there remains no systematic analysis of this question since the Leave vote. This paper addresses that lacuna by evaluating the empirical evidence concerning jobs, investments, and share of key trading markets (between June 2016 and May 2020). Contrary to widely held expectations, the evidence suggests that the City has been remarkably resilient. Brexit has had no significant impact on jobs and London has consolidated its position as the chief location for financial FDI, FinTech funding, and attracting new firms. Most unexpectedly, the City has increased its dominance in major infrastructure markets such as (euro-denominated) clearing, derivatives, and foreign exchange – although it has lost out in the handling of European repurchase agreements. Based upon this evidence, the paper argues that the UK’s negotiating position is stronger than typically recognised, and outlines the competitive ramifications for both the UK and EU financial sector.
Topic:
European Union, Brexit, Resilience, Financial Services, and Relocation
Political Geography:
United Kingdom, Europe, and London

2. Fostering a Defense-Industrial Base for Europe: The Impact of Brexit

Author:
Torben Schütz and Christian Mölling
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
The European defence technological industrial base (DTIB) represents a core element of European defence and deterrence – it is a strategic asset. Strong defence industries multiply the deterrent effect of the armed forces. However, national industries in most countries cannot offer the full range of supplies needed by national armed forces. Despite the fragmentary nature of its industries, Europe collectively has most of the range of defence-industrial capabilities, enabling, at least notionally, security of supply for EU and NATO partners. The UK’s share of defence-related turnover among European companies is almost 40%. The UK also makes defence-industrial contributions to many multi- national projects. While Brexit does not remove the UK’s defence-industrial base from the wider European environment, it will complicate its involvement. The EU’s growing role in defence-industrial matters, through regulation and financial resources, is shaping the wider European DTIB. At the same time, the Union’s ambition as a security actor creates an obligation to ensure that European partners outside the EU can contribute as effectively as possible to European defence and deterrence. In order to do this: The UK, EU institutions and EU governments should work toward as close a common understanding as possible that safeguarding a sustainable, innovative and competitive European defence industry is in the strategic interests of all political partners in Europe. The UK and its EU partners should establish politically and structurally significant flagship armament projects. Such projects would support a shared objective, namely to consolidate the still fragmented European DTIB, and in the process make it more competitive. A European Defence Industrial Review should be launched to help identify key industrial branches and companies that are of structural relevance to the European DTIB, and therefore to European defence and deterrence. For future regulations related to the defence industry, the EU should take a ‘systemic view’, i.e. also take into account how a regulation affects European partners and contributors outside the EU.
Topic:
Defense Policy, Regional Cooperation, Military Strategy, European Union, and Brexit
Political Geography:
United Kingdom, Europe, and London

3. Opportunities for Defense-Industrial Collaboration after Brexit

Author:
Douglas Barrie
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
The United Kingdom should seek to continue to support defence-technology cooperation with the European Union and partner states across all military domains. Avoiding, or at least minimising, the second-order effects of Brexit on wider defence cooperation with European partners will be easier if the UK is directly involved in the EU’s defence-technology initiatives. Specific opportunities present themselves across the military domains: Pursue cooperation in the air domain with regard to future combat- aircraft technology. While collaboration at the platform level is unlikely in the near term, exploring common R&D in key systems, such as radar, propulsion, avionics, sensors and weapons, is achievable. In the land domain, explore partnership with France and Germany on participating in the development of a next-generation main battle tank. Collaboration on applicable technologies at the component and sub- system levels should also be encouraged. This could include armour and armament R&D, and laser weapons. In the maritime domain, support cooperation in the air-defence arena, including the use of laser weapons for ship self-defence, and the use of naval vessels for ballistic-missile defence. In the space domain, examine potential cooperation on next-generation communication satellite requirements, and wider collaboration on geospatial intelligence.
Topic:
Defense Policy, Regional Cooperation, Military Strategy, European Union, Brexit, Maritime, and Space
Political Geography:
United Kingdom, Europe, France, London, Germany, and Brussels

4. UK Participation in the EDA and the new EU defense package in the context of Brexit

Author:
Lucie béraud-Sudreau
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
To continue United Kingdom participation in European Union defence cooperation:  The UK, the European Commission and EU member states should strive to avoid near-term decisions that would shut out the UK from future participation in EU defence policies.  Pursue agreement on the nature of a ‘third-state’ position as applied to the UK, ensuring the goals of Brussels and London are met.  Identify ways for London to show its commitment to supporting the EU’s defence ambitions, signalling clearly a change from previous opposition.  Brussels and London need to agree the key preconditions that will under- pin any deal over the European Defence Agency (EDA), the European Defence Fund (EDF) and Permanent Structured Cooperation (PESCO).  The UK should aim to ensure a single point of entry through the European Defence Agency for defence cooperation with the EU, in the absence of a Commission directorate-general for security and defence. Reach agreement on an overarching financial contribution covering access to the EDA, the EDF and PESCO, while London also commits to contributing funding to specific projects it wishes to take part in.
Topic:
Defense Policy, Regional Cooperation, Military Strategy, European Union, and Brexit
Political Geography:
United Kingdom, Europe, London, and Brussels

5. The UK’s potential role in enabling EU–NATO cooperation after Brexit

Publication Date:
06-2018
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
The United Kingdom, having expressed interest in a strong EU–UK security partnership and having indicated that, if anything, its commitment to NATO will be even stronger after Brexit, has an opportunity to be a leader and facilitator in the context of EU–NATO cooperation in meeting emerging threats. Several of the priority areas and action items defined by these two organisations, following a declaration to enhance their cooperation at NATO’s 2016 Warsaw Summit, play to the UK’s strengths: To increase the level of cooperation between the EU and NATO, and in order to implement the cooperation agenda, the UK should invest both financially and in terms of personnel, via voluntary national contributions to NATO. The UK taking on a leadership role in the area of inter-organisational cooperation would signal to EU partners that stronger support for NATO is not intended to weaken EU initiatives; it is an opportunity to stress the complementary nature of EU and NATO capabilities. Given its limited resources, the UK could, in effect, use engagement in EU–NATO cooperation to hedge its bets on both organisations. Stronger support for NATO can directly benefit the EU’s security and defence initiatives, while making sure that cooperation results in added value in both multinational frameworks, rather than fostering institutional competition.
Topic:
NATO, Regional Cooperation, Military Strategy, European Union, and Brexit
Political Geography:
United States, United Kingdom, Europe, London, and Brussels

6. Could the EU deliver on its military ambitions after Brexit?

Author:
Douglas Barrie, Ben Barry, Henry Boyd, Marie-Louise Chagnaud, Nick Childs, Bastain Giegerich, Christain Möelling, and Torben Schutz
Publication Date:
11-2018
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
he ability of the European Union to act in defence, today and in the future, is an important reference point in the debate about EU strategic autonomy in the context of Brexit. The EU has set itself a military level of ambition. Under the heading of the Common Security and Defence Policy (CSDP), EU member states want to be able to conduct a range of military operations. Together with the German Council on Foreign Relations (DGAP), this study assesses to what extent the EU is able to fulfil this level of ambition, today and with an outlook towards 2030. The IISS and DGAP have developed policy-compliant scenarios to assess where possible capability shortfalls lie. Our findings benchmark existing and future EU member state capabilities against the force requirements the EU level of ambition generates.
Topic:
Regional Cooperation, Military Strategy, European Union, and Brexit
Political Geography:
United Kingdom, Europe, London, and Germany