Brexit, Covid-19, and Possible Frameworks for Future UK/EU Financial Governance Cooperation

The EU project is at an inflection point. Intra-EU alliances are altering in light of the UK’s departure, the EU’s financial markets remain segmented, and there is limited appetite for completing the Banking Union. The second stage of the Brexit negotiations also collided with the Covid-19 pandemic, a medical emergency that has placed economies around the world under tremendous strain. This combination of issues amounts to a ‘polycrisis’ for the EU, aspects of which raise existential questions about the future of the EU project. This article focuses on one strand of the debates generated within this polycrisis: future UK/EU policy cooperation with respect to financial governance; or the mechanisms which support financial market regulation and supervision. The article discusses the importance of the financial services sector to the UK and the EU, and examines potential institutional options for future financial governance cooperation. In particular, the article advocates harnessing the dexterous aspects evident within precedents, including in existing EU/third country association agreements, to develop a functional arrangement for future financial governance cooperation. Such a framework could also lead to closer UK/EU cooperation than currently appears likely.