| abstract |
After forty-three years of membership, 51.9% of the United Kingdom electorate voted to "leave" the European Union on June 23rd, 2016. The decision has been referred
to as "Brexit", short for "British exit". The referendum, called by Prime Minister David Cameron, had a national turnout of 72.2%, with results that revealed sharp
national divisions. With a year until the official day Brexit, on March 29th, 2019, the UK and EU have to sign a trade deal that will establish the fundamental
structure for the future relationship between the island and the rest of the continent. While the long-term consequences for the UK remain unclear, one thing is
certain, the EU wants the negotiations to be a painful process for Britain. Its officials fear that a good Brexit deal for Britain will inspire other member
states to exit, attempt to negotiate similar agreements, and thus lead to the disintegration of the EU. The first chapter of this thesis provides a timeline
of the major events leading up to the UK's exit from the European Union and a description of who is involved in the negotiations as well as the political and
economic interests of the British government and the European Union. The second chapter examines the factors that contributed to the victory of the "leave"
vote in the UK referendum. The Brexit vote was the result of Britain's historical relationship with Europe, the 2008 financial euro-zone crisis, and the rise
of populist euro-skeptic parties in recent years. The third chapter explores the financial consequences for the City of London after Brexit by drawing
comparisons between the potential consequences of a "Hard Brexit" and a "Soft Brexit". My thesis defends that the City of London will continue to be Europe's
financial capital but if Britain undertakes a "hard Brexit", UK firms will lose passporting rights and the ECB will claim the relocation of clearing houses,
causing the City to lose a significant part of its financial business. I rely on a variety of secondary academic and journalistic materials, on academic and
policy conference talks I attended, and on and interviews I conducted with financial professionals in the City of London and with staff members of the European
Commission and Parliament in Brussels for my sources.
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