Here’s how the European Commission will steer the bloc after Brexit.
The vice president of the European Commission has disclosed that following the Brexit negotiations the bloc will turn its focus towards boosting the green economy, infrastructure and risk finance while noting that Britain’s departure could potentially deprive the EU of its largest financial centre.
In 2015, the commission had launched a plan which tried to create a capital market union (CMU) by 2019 so as to streamline and smoothen the movement of capital goods across national boundaries and in the process help reduce the dependence on banks for loans for economies within the European Union.
The ambitious plan was cut short and weakened because of Brexit. However as a fallout, the City of London could find it difficult to find liquidity in the continent.
“The prospect of Europe’s largest financial center leaving the single market makes our task more challenging, but all the more important,” said Valdis Dombrovskis, the European Commissioner in a finance conference in Brussels.
Later this year in June, the commission is scheduled to publish a review of the plan based on the feedback that has been collected from the finance industry.
Dombrovskis has listed infrastructure and green projects, risk finance, as the sectors where the plan is expected to deliver results.
He said the commission will continue to overhaul EU’s financial legislation to favor the growth of alternative sources of finance so as to minimise the over dependency of banks for businesses.
He has further disclosed that regulatory changes may be coming in the asset management sector so as to minimise red-tape and help funds move smoothly across national borders within the EU.
In order to boost investment in the infrastructure, the commission will continue to lower capital requirements for companies involved in construction projects.
However before this the cost of financing for banks and insurance companies will also have to come down.
Dombrovskis stated that the expert group the commission had set up for green financing will make their proposals available by the end of this year.