Brexit & the U.S. Elections Santiago, Chile. November 9, Sarah Jane Mahmud Regulatory Analyst

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1 Brexit & the U.S. Elections Santiago, Chile November 9, 2016 Sarah Jane Mahmud Regulatory Analyst

2 Bloomberg Intelligence (BI) provides in-depth analysis and datasets on industries, companies, and government, ESG, credit, economic and litigation factors that can impact business decisions. Bloomberg Intelligence research is backed by 300+ third party data providers and is delivered with no buy or sell recommendations. Our analyst team averages 20+ years of buy- and sell-side research experience. BI is exclusively provided to clients who subscribe to the Bloomberg Professional Service and can be accessed at BI<GO>.

3 Vote to leave the EU: 23 June Legal consequences No precedent Lengthy exit process Constitutional challenge Access to 27 EU countries 3

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5 Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. A Member State which decides to withdraw shall notify the European Council of its intention. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification. 5 - Treaty of Lisbon

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7 The Crown has no prerogative power to effect a withdrawal from the Community Treaties on whose continues existence the EU law rights introduced into domestic law depend.... The Crown therefore has no prerogative power to effect a withdrawal.... We hold that the Secretary of State does not have power under the Crown s prerogative to give notice pursuant to Article 50 for the United Kingdom to withdraw from the European Union. - Court Judgment (3 November 2016) 7

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9 During the past twenty years, we have incorporated more than 10,000 EU rules into the EEA agreement. However, we have had little direct influence over these rules. We are merely consulted. The EU is under no obligation to listen. We have to work hard to make our voice heard. I have a hard time seeing the UK, with its global ambition, dedication and contributions, being comfortable with such an arrangement. - Norwegian Government 9

10 Over 120 sector-specific treaties Unique model Not sustainable Limits size of financial centre TITLE Free movement OF rules EU unlikely to offer same option 10

11 Default option Used by Brazil, Russia No favourable relationships Risk to trade Financial-services 11

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13 2.2 million people 190 billion to UK economy 67 billion tax revenue 72 billion trade surplus 11.8% economic output > 100 billion foreign company investment 13

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15 A passport is a mechanism through which firms may exercise their right to provide services and their right to establishment. With a passport, an entity s authorisation to do business in one EU Member State (and under certain directives in EEA states, too) is recognised by all other Member States as an authorisation to business in their territory as well. As such, a passport obviates the need to obtain separate authorisations from other Member States. - Financial Conduct Authority 15

16 Outbound: 336,421 passports 5,476 companies Inbound: 23,532 passports 8,008 companies 16

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21 What is bi <go>? 21

22 Economic impact Commodity prices TITLE Export OF income Investment anxiety 22

23 Redefine trading relationship 7 billion exports 1.7 billion trade surplus Mercosur trade talks TTIP negotiations stall 23

24 Brexit is the most significant political risk the world has experienced since the Cuban Missile Crisis. - Ian Bremmer, Eurasia Group President Political turmoil European elections No Union EU disintegration Popularist sentiment U.S. elections 24

25 : Supreme Court decision: 1Q17 Article 50 Soft or hard Brexit Access to single market and trade relationships 25

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