Article 50 - how the future of EU-UK relations will be decided
On March 29, 2017, the European Parliament published an article explaining the next steps following the implementation of article 50 of the Treaty of the EU.
About article 50
Article 50 sets out the process for a member state to leave the EU. It is up to the country in question to withdraw "in accordance with its own constitutional requirements". Once triggered, article 50 allows for two years of negotiations, although this can be extended unanimously by the European Council.Although the aim is to come to a deal, it is also possible there is no agreement at all.
The EU and the UK have two years to negotiate a withdrawal agreement setting out the arrangements for how the country will leave the Union, while "taking account of the framework of the future relationship with the Union". The arrangements setting out the framework for future relations will be part of a separate agreement, which could take considerably longer to negotiate.If negotiations are successful, the withdrawal agreement would need to be ratified by the UK, approved by the European Parliament, as well as by at least 20 out of 27 member states represented in the Council.The agreement on the future framework would need to be approved by all member states and the European Parliament.
What the withdrawal agreement will cover
What the agreement on the future framework could cover
- The withdrawal agreement will cover issues such as:-The rights of EU citizens in the UK -The rights of UK citizens living in other parts of the EU
- The UK's financial commitments undertaken as member state
- Border issues (especially the one between the UK and the Republic of Ireland)
- The seat of EU agencies
- International commitments undertaken by UK as member state (for example the Paris agreement)
- The agreement on the future framework would set out to describe the conditions for cooperation on a variety of issues, ranging from defence, the fight against terrorism, the environment, research, education and so on. One of the key sections would be to agree the basis for future trade. It could also describe possible tariffs, product standards, and how to resolve disputes.
What happens if there is no agreement?
If there is no deal and there is no agreement on extending the deadline, then the UK automatically leaves the EU after the two-year period. In addition, if no agreement is reached on trade relations, the country would have to trade with the EU under WTO rules.
The role of the Parliament
The withdrawal agreement cannot enter into force without the consent of the Parliament. In the coming weeks MEPs are expected to adopt a resolution setting out the red lines for the Parliament.MEPs will be able to influence negotiations by adopting resolutions setting out the Parliament's position.
AFME publishes report on challenges of Brexit implementation for wholesale banking
On April 5, following the UK Government’s decision to invoke Article 50, AFME has published a paper outlining the implementation issues facing wholesale banks, their clients and supervisory authorities.
The paper, entitled “Implementing Brexit: practical challenges for wholesale banking in adapting to the new environment”, assembles the available evidence to help Europe’s policymakers reach an informed view of the potential challenges in Brexit implementation for wholesale banking and capital markets and how best to mitigate the risks arising to financial stability and market functioning of the two-year timeframe.
To read the report, click here.
European Commission prohibits proposed merger between Deutsche Börse and London Stock Exchange Group
On March 29, the European Commission published a statement by Commissioner Vestager on the decision to block the proposed merger between Deutsche Börse and London Stock Exchange Group.
According to Commissioner Vestager:
“The European economy depends on well-functioning financial markets. That is not just important for banks and other financial institutions. The whole economy benefits when businesses can raise money on competitive financial markets. That requires effective competition on the financial infrastructure markets. They allow financial instruments, like shares and bonds, to be bought and sold. Those markets are already concentrated, with a small number of large operators.”
She pointed out that it is “the Commission's role to make sure that mergers in the EU do not weaken competition” and that “the Commission could not approve this merger on the terms which the two companies proposed.”
Click here to read the full statement.
New €50 banknote
On April 4, the European Central Bank (ECB) announced the circulation of a new €50 banknote with tougher security measures.
EBA Risk Dashboard
On April, 3, 2017, the European Banking Authority (EBA) published a periodical update of its Risk Dashboard summarising the main risks and vulnerabilities in the EU banking sector by a set of Risk Indicators in Q4 2016.
According to the dashboard, low profitability and the high amount of bad loans on banks’ balance sheets are the biggest challenges facing EU lenders.
The EBA highlighted its concern with the high level of NPLs, despite the “quality of banks’ loan portfolios” that have been “improving” in previous quarters.