As Europe enters a new year it does so with a brand-new Commission, a long list of regulation to review, and a complex relationship with the UK.

While the past five years have been focussed on getting post-crisis regulation delivered, the next political cycle will be ensuring the regulation is calibrated so it works for markets and citizens.

However, the new Commission also acknowledges a number of new challenges. While the Juncker Commission focused on boosting economic growth and post-crisis reform, the von der Leyen Commission is taking office with a focus on wider social priorities such as climate change, technology and globalisation. This will have a clear impact for the future direction of Europe’s capital markets.

The new Commission has already outlined grand plans to ensure Europe is carbon neutral by 2050 in its EU Green Deal. However, in order to achieve this target clear definitions of green finance and sustainable assets will need to be clarified through the EU sustainable finance taxonomy. This will deliver a universal standard of what is considered “sustainable” across the EU and mitigate “greenwashing” – labelling products as “environmentally friendly” without a means of verification.

For the EU to remain globally competitive and at the forefront of innovation, the Commission has also identified that a focused digital technology agenda will be vital for the next political cycle.

FinTech is transforming capital markets by introducing platforms and servicing solutions; increasing competition with the intention of increasing efficiencies, enhancing risk management, lowering costs and improving services for businesses and investors. However, the future success will depend on the EU’s ability to prioritise investment and a culture of innovation across the industry.

Innovation in particular is an area where Europe will look for improvement next year. In contrast to the US and Asia, Europe doesn’t have a single digital champion in the mould of Amazon and Google. In order to increase the chances that the next digital unicorn is from Europe, more investment in smaller entrepreneurial companies is needed.

This can be achieved by progressing the Capital Markets Union (CMU) project, with hopes that the Commission’s High Level Forum can recommend concrete, consensus-driven recommendations to take forward. Reducing fragmentation and encouraging greater investment across borders will be critical in improving Europe’s global capital markets competitiveness and ensuring it does not fall behind other global markets.

However, the CMU project faces its greatest challenge yet in 2020 with the departure of its largest capital market, the UK. Brexit means there is more urgency than ever to complete the CMU project to ensure it can deliver on its objectives of creating deeper, more integrated capital markets which can support growth and investment for the remaining EU Member States.

Following the outcome of the UK general election, it appears clear that the UK will leave the EU on 31 January. The forthcoming negotiations on the future relationship and the adequacy and equivalence arrangements for financial services will have significant implications for European wholesale capital markets.

It is critical that the EU and the UK work together to develop a future relationship which supports financial stability and minimises fragmentation in wholesale markets, ensuring an effective and stable relationship for the future.

Equally, Europe will have to ask questions of its engagement with the rest of the world. Financial markets are global by nature and to be truly transformative the CMU must embrace globalisation. By supporting interconnected markets, investment will then be unlocked both within the EU and the rest of the world to drive economic growth.

As Europe embarks upon a new year it can look back on 2019 as a period where the groundwork has been laid for progress in 2020. Despite having made some advances on climate change, technology and globalisation, 2020 is the period when wider change is expected. Crucially, with the rise of citizen activism in Europe, change will not only be expected, it will be demanded.