Everything you need to know about the EU agencies leaving London because of Brexit

The fates of European Medicines Agency and European Banking Authority will be decided in November.

In four months, new destinations for Europe’s banking and medicines regulators will be decided by EU leaders in a vote triggered by Brexit. No longer able to remain in the U.K., the two prestigious agencies will be relocated elsewhere in the bloc.

For the hundreds of staff working at the European Medicines Agency and European Banking Authority and their families, this is a critical moment that will shape their lives. Likewise, for the cities bidding to welcome them, there is much at stake — political cachet and an economic boost.

With the end of July deadline for bids from countries hoping to host the agencies looming, this is POLITICO’s guide to what is happening and why it matters.

What do the European Banking Authority and European Medicines Agency do?

EBA: It’s part of the European System of Financial Supervision and is one of three financial supervisory authorities, which include the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). Its main task is to help write the European Single Rulebook for EU financial institutions by drafting technical standards and guidelines. It is also supposed to promote convergence in how EU countries comply with financial regulations by doing things like monitoring national implementation of rules. It also administers EU-wide bank stress tests.

EMA: Regulates human and animal health medicines that are marketed across the European Union. It provides the pharmaceutical industry with guidance on what evidence is required to demonstrate that a product is safe and effective, and also assesses the final evidence to decide if the drug is fit to be placed on the market. The EMA does not issue drug licenses; it advises the European Commission, which signs off on these decisions. The EMA also oversees the continued safety of a product. It manages a database of reported adverse events (such as unexpected side-effects) and investigates when concerns are raised. It has the power to recommend a drug’s license be revoked. The agency also provides the most up-to-date information on medicines and the data that supports their licenses.

Why are they moving?

Immediately after Brexit was triggered, there was speculation the U.K. could hold onto the agencies, or at least maintain some kind of membership of them, as non-EU members Norway, Iceland and Liechtenstein do. Although there is no specific law or treaty that states an EU agency cannot be outside the EU, it is commonly assumed that the headquarters of a European agency shall be hosted by an EU member country. Prime Minister Theresa May’s insistence that the U.K. would leave the single market and EU jurisdiction removed any doubt because membership of the agencies is governed by EU laws.

How will this affect me?

EBA: It depends on what you do. If you work in financial services, not having the EBA nearby could make having a voice in the consultation and decision-making processes around EU regulation more difficult. Although Britain is leaving the EU, the banks based in the City of London still want to carry on doing business there. Having less access to the EBA provides another incentive for them to move some staff onto the Continent.

That might have a knock-on effect even if you don’t work in financial services. The economy could take a hit if moving the EBA further exacerbates the movement of financial services industry workers out of London.

EMA: Ending membership of the EMA could result in delayed access to the latest new medicines for U.K. patients. After Brexit, depending on the deal that the U.K. government makes with the EU, drugmakers are likely to face a separate regulatory process to launch their products in the U.K. Patient groups fear that because the U.K. market is so much smaller, it will make it less attractive for companies who will put their efforts into authorizing drugs in the EU first. There are also concerns over whether the U.K. will continue to be linked to the EMA’s drug safety monitoring database to help identify adverse events tied to a medicine more quickly across Europe. The U.K. would be excluded from a new clinical trials database, which the EMA is launching in 2019, that will speed the time it takes to start a new study anywhere across Europe. The drugs sector warns this could diminish the incentive to carry out research in the U.K.

How and when will the location be decided?

The process for deciding where the agencies will be relocated was set out in a European Council document published June 22. The document calls for contenders to submit bids with information on how they would meet a list of six criteria:

1. The agency must be fully operational at its new site at the time the U.K. leaves the EU. That means bidders need to show a facility can be totally outfitted with offices, meeting rooms, archiving and telecommunications equipment that meet IT security standards.

2. The location needs to be easily accessible, with sufficient flight connections from EU member country capitals, and reliable public transport to airports, as well as enough hotels to accommodate large meetings with international visitors.

Click Here: Aston Villa Shop

3. Adequate facilities for current and future educational needs of children of the staff.

4. Access to educational and career opportunities, social security and medical care for staff families.

5. Resources to ensure the agency remains functional during the transition. That could mean, for example, having a rich enough labor market to fill vacancies quickly left by those employees who decide not to move.

6. Geographical spread, which refers to how spread out agency locations should be across the EU.

Each country can offer to host one or both agencies but make only one offer per agency. All bids are due July 31 and will eventually be published on the website of the Council of the EU.

The European Commission will then evaluate bids by September 30 and present findings in October to the Committee of Permanent Representatives in the European Union. The Commission will not rank the bids. Candidates will be allowed to present their bids in person.

Voting happens in November at the General Affairs Council. There will be up to three rounds of secret voting. Countries can abstain, and they can vote for themselves. Voting on the EMA will happen first. In the first round, each country has 6 points. They must give three points to their preferred bid, two to their second choice and one to their third. If no single country secures 14 first preference ballots (a majority of the 27 EU member countries), they move to round two.

In the second round, countries vote for one of the three (or more) bids with the highest votes from round one. Each country has one vote, which they must issue to their preferred bid. If no single offer receives 14 or more votes it moves to round three, where countries vote for one of the two remaining offers with the highest votes. The bid with the most votes wins. If there is a tie, the presidency will draw lots.

Voting on the EBA will follow the same process. The winning member country for the EMA will be excluded as a candidate for the EBA location, though they can still vote.

Doesn’t the staff get a say?

The agencies will have no say. However, when drafting its assessment of the bids, the Commission will consult with the agencies on how the bids meet their technical requirements. To date, 17 of the 23 countries that expressed an interest in hosting the EMA have visited the agency to find out what the staff need to operate and relocate smoothly.

What happened when this voting process was used before?

The only precedent dates from 2013 when the EU Agency for Law Enforcement Training (CEPOL) had to leave the U.K., which did not want to host it anymore. Seven cities applied to host the 60-staff agency: Templemore, Ireland; Veria, Greece; Avila, Spain; Rome; Budapest; The Hague; and Tampere, Finland. The voting took place at a meeting of justice and home affairs ministers in October 2013 and Budapest won.

Voting for the relocation of the EBA and the EMA is expected to be more complex because there’s a larger pool of applicants and greater political sensitivity.

Why are they such a big prize?

EBA: It only has 167 employees (plus 17 seconded national expert posts), but the EBA is an important cog in the wheel of EU financial regulation. The think tank Bruegel says that by attracting a chunk of the finance industry to relocate with it, there will be extra benefits for the host city like high-quality jobs, a boom for supporting services like law firms, and higher tax revenues.

EMA: The larger of the two prizes, the EMA has 890 full-time staff (54 percent of them with children) and hosts 36,000 experts for scientific meetings every year. That level of activity will boost any economy, through hospitality, spousal jobs, support services etc. Proximity to the EMA has been a key reason cited by non-EU international pharmaceutical companies — particularly from the U.S. and Japan — for opting to base their EU headquarters in the U.K. There’s a high chance some of those businesses will follow the EMA to their new host country.

What is the deadline?

It’s Monday (July 31).

Who wants them?

EBA: The EBA has been courted by over a dozen capital cities on the Continent, said the agency’s Executive Director Adam Farkas. However, he had no insight into how many of those courting sessions might translate into actual bids.

To make things more interesting for the EBA, the question on relocation has also overlapped with a required review of the European Supervisory Agencies, which was released in March.

That consultation proposed that the EBA could be merged with the European Insurance and Occupational Pensions Authority, which is located in Frankfurt, and consumer protection powers carved out and put under the European Securities and Markets Authority in Paris. That original merging idea was actually floated back in the 2014 review of the European Supervisory Agencies, but the 2017 consultation suggests it may have found its time with Brexit — Germany is very much in favor of this, while France isn’t keen.

The Czech Republic, Germany, Ireland, Luxembourg, Hungary and Poland are among those who have expressed an interest. Ireland published a public brochure welcoming the EBA, while the Czech government wants the EBA to be located in Prague, according to a report from CTK.

EMA: Within months of the Brexit referendum 23 out of 27 EU countries had expressed an interest in hosting the EMA. According to POLITICO research, that number has now fallen to 21, but there could still be a last minute surprise once the bids have been submitted and are publicly available.

The countries that have ruled themselves out of the bidding are the three Baltic states (Estonia, Latvia, Lithuania), as well as Slovenia and Luxembourg, with the latter only bidding for the European Banking Authority. The Czech Republic and Slovenia have also backed out, after showing an initial interest.

Who are the front-runners?

EBA: The front-runner is Frankfurt. The German financial hub leads the pack on attracting a big chunk of banking business, with major international firms like Citigroup, Deutsche Bank and most recently Mizuho planning on opening offices there. A recent poll by lobby group Frankfurt Main Finance found that 57 percent in the German financial industry believe the EBA will come to Frankfurt. But Paris is actively contesting Frankfurt’s bid and likely to veto any moves to merge the EBA with EIOPA.

EMA: Broadly speaking, the Western European and some Scandinavian countries appear to be front-runners. They have been the most vocal and open about their bids. Some, like the Netherlands, Ireland and Denmark, hosted events in Brussels to present their bids. This is in stark contrast to others like Bulgaria, Finland, Hungary and Slovakia, who are keeping bid details more quiet.

What do the banking and pharma industries think?

EBA: Apparently, most bankers don’t really care where the EBA ends up, and seem to feel the debate is a political one that they should not get involved in. “I really don’t think banks will go out of their way to lobby for one location or another,” one lobbyist at a European bank told POLITICO.

EMA: By contrast, the pharmaceutical industry does care — a lot. National pharma lobby groups were first to publicly state they wanted the EMA in their countries, ahead of official government backing. Denmark’s Novo Nordisk actively campaigned for the EMA to move to Denmark, tweeting and issuing statements in support of Copenhagen’s bid. Former Novo Nordisk CEO Lars Rebien Sørensen was appointed special envoy of the Danish government in February and visited the EMA in June. Similarly, France’s pharma lobby LEEM enthusiastically backed the Lille bid, as did respective trade groups in Sweden, Germany, Italy and others. The EU-wide pharma lobby group, however, took no stance.

How can I find out more about the bids?

EBA: Dublin produced a brochure. The Czech Republic wrote a letter about its candidacy. 

EMA: The following cities have websites about their bids: Vienna; Brussels; Copenhagen; Lille; Bonn; Dublin; Milan; Amsterdam; Stockholm; Athens, Zagreb. See this interactive graphic for more details about the countries’ work courting the agency.

— This article was corrected on 7 August. A previous version stated an incorrect figure for the number of employees at the European Banking Authority. This has been changed to the number (184) cited in the EBA’s Statement of revenue and expenditure for 2016/17.