COMMENTS
We hear BRITISH politician talking about the need for increased regulation and more international cooperation all the time since the start of the credit crunch, yet when ideas are put forward by the EU, you are all up in arms. Read all comments »
London Mayor Boris Johnson’s interventions on behalf of the City of London are timely. The City is a hugely important to the British economy. It accounts for nearly 4% of UK GDP. It is a major tax payer, makes a substantial contribution to the balance of payments and is a major employer. Around 300,000 people work in wholesale finance and the professional support services. It is also, by far, the largest financial centre in Europe and probably the world’s leading global financial centre.
And yet this vitally important sector is under threat the EU’s increasing intervention in Britain’s financial services. When the financial services were included in the Single Market in the late 1990s and the UK handed over regulatory control to the EU, it was inevitable that heavily-interventionist EU regulations would be forthcoming to control London’s markets. No-one should have been surprised. The latest Alternative Investment Fund Management Directive is but the latest manifestation.
There is a misconception that the Single Market is a about free trade. But primarily it is not. It is about carefully controlled, heavily regulated and “harmonised” markets, where there are “level playing fields” and there is no “unfair competition”. Now the UK is but one voice amongst 27 in the EU. Most of the 27 are not interested in, or understand and/or are sympathetic to the City. Some are even downright hostile. Under Qualified Majority Voting, used for EU Single Market legislation, the UK has only 8% of the votes. We are in a tiny minority. And in the wake of the financial crisis the EU has been quick to respond. Brussels will not just have regulatory control over the City – but also high-level supervision as well.
I find this alarming. British authorities will no longer be in control of either the rules or the overall supervision of one of Britain’s most important sectors. Given the lack of sympathy for the City in Brussels, this will almost certainly be to the detriment of London and those who work there.
We have effectively two choices. Either we “put up and shut up” or we seek a new, more modern relationship with the EU, based on trade and mutually beneficial cooperation but crucially opting out of political and economic union, so we can regain control of our economy. I vote for the latter.
Ruth Lea is a director of Global Vision.
