27 January 2022
Less than a month ago we celebrated the first anniversary of Brexit in a minor way. With all the corona problems, little attention was paid to this birthday. Or perhaps the lack of attention had more to do with the - fortunately - limited impact that the exit of the United Kingdom had on our economy and society. From an economic point of view, the ties have therefore not been completely cut. There is still a free trade zone for goods, but this does not mean that sending goods across the border is as smooth as it used to be. The administrative burden has not been reduced by it, on the contrary.
For financial services, the story is a bit different. Brexit here also really means Brexit. London banks are no longer under the supervision of the European supervisory authorities. As a result, the financial stability of the London institutions can no longer be sufficiently monitored or guaranteed. You can therefore no longer offer financial services in the euro zone from London.
In a free market system, this new border is of course no problem at all: you simply move your activity from London to the euro zone. And that is what we actually saw last year. Hundreds of English financial institutions have set up a hub in the eurozone: banks moved to Frankfurt or Paris, funds housed in Luxembourg or Dublin, and other institutions moved to Amsterdam. Conclusion: almost all of them walked in a wide arc around Brussels. Painfully confrontational. Brexit does not show us a nice mirror image.
It was not really unexpected that our country was skipped as a location, but it is still very unfortunate. It could have been different. In 1973, then MIT professor Charles Kindleberger tipped not London or Paris, but Brussels as the major contender to become the financial center of Europe. Brussels had many assets and yet it was not allowed to be. History turned out differently.
But history need not continue down that same path. The foundations for a role as a larger financial center have not been lost. On the contrary. Our country has everything it takes to create a healthy and growing financial ecosystem, especially in a period where everything revolves around technological change. We are figuratively located in the center of Europe, we have a number of absolute global players such as Euroclear or Swift, our banks have been European leaders in digitization for years and our universities are among the absolute world leaders in encryption. In short: all crucial elements for the financial world of tomorrow are present. Our country effortlessly surpasses most other countries in that respect.
It comes down to connecting the dots in order to create a strong ecosystem. If we want to turn Brussels into a financial centre, we must explicitly and very consciously choose to do so by developing a strong policy: by encouraging foreign investment in the financial sector in a broad sense, by making research and investment costs more deductible , by thinking along with innovative companies as a policy maker and by keeping an eye on the positive consequences of innovation and not just the risks.
Economic factors plus a conscious policy choice also turn an economic center into a financial centre. London understood that. The success of our biotech valleys proves the effectiveness of such a policy. So let's apply that to the financial sector as well, because it increases the pie for everyone and benefits the whole country. History has taught us how not to do this. Then together let's make sure she doesn't repeat herself.