"In many areas the connectedness between both financial markets is still strong. For example, EU banking activity involving UK institutions has surged 60% since the 2016 referendum and while UK banks have successfully diversified to other global markets (reducing their overall share of EU lending by 20%) the overall value of UK bank lending into the EU still remains higher than vice-versa (12% vs. 8%)."
"However, the UK capital markets are nearly twice as deep relative to the size of the economy than EU capital markets. Both, however, trail far behind the US which are three times as deep as the EU. The UK also has a significantly larger pool of long-term capital compared to the EU (204% of GDP vs. 169%). Both, however, trail far behind the US at 436%."
EU and UK financial markets remain strongly interconnected, with EU banking activity involving UK institutions surging 60% since the 2016 referendum. UK banks have diversified to other global markets, reducing their share of EU lending by 20%, yet UK bank lending into the EU remains higher than vice-versa (12% vs. 8%). UK capital markets are nearly twice as deep relative to the size of the economy as EU capital markets, while both trail the US, which is roughly three times as deep as the EU. The UK holds a larger pool of long-term capital (204% of GDP) than the EU (169%), while the US stands at 436%. Cross-border venture capital ties remain strong, two-thirds of euro-denominated derivatives trading still happens in London, a fifth of EU-domiciled investment funds are managed in the UK, and the percentage of EU equity shares held by UK investors increased from 30% to 36% of all cross-border equity holdings by UK investors. Increased cooperation to reduce frictions and boost investment is presented as a priority.
#euuk-financial-interconnectedness #cross-border-banking #capital-markets-depth #venture-capital-flows
Read at London Business News | Londonlovesbusiness.com
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