"Brexit: The Unintended Consequences. A Symposium of Views"

The European Union would do what it could to squeeze British financial services out of the Continent.
Hans-Werner Sinn

The International Economy, p. 8

The British liaison with the European Union has admittedly been difficult. Although they are Europeans, the British still say they travel to Europe when they cross the Channel. With some reluctance, the United Kingdom joined the European Economic Community in 1973, and the French were reluctant to accept it, after French President de Gaulle had vetoed British accession in 1963.

In the meantime, the United Kingdom's trade links with the Continent have increased significantly. The British economy has become a solid and firmly interwoven part of the EU economy, and the City of London has become a hub connecting the EU capital market with the rest of the world.

If Britain left the European Union, all this would be put at risk. In particular, the European Union would do what it could to squeeze British financial services out of the Continent to give EU banks a competitive advantage. Given that the financial sector contributes 7 percent to British GDP which is twice that sector's contribution to German GDP, this would probably be the biggest cost to Britain.

For Europe, a Brexit would have similarly problematic consequences as it would lose gains from trade. Even though European banks would be glad to get rid of their competitors, private households and business sectors importing from Britain would suffer significantly as prices of goods and services would go up.

From a political perspective, a Brexit would be problematic insofar as the European Union would be subject to French planification and lose sight of the basic principles of a market economy. British liberalism was one of the reasons why Germany had advocated Britain's accession in 1973. Losing the United Kingdom would risk building a Fortress Europe rather than a free trade area and drifting even further in the direction of a dirigiste economy.

And, what is more, how could a United Europe become a respectable power in world politics if Britain with its worldwide cultural network and its armed forces no longer participated? No, by all means, Britain must stay in the European Union for its own sake and for the sake of European peace and prosperity.