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GUEST COMMENT: The EU’s threat to jobs in the City of London
19 October 2009By Ruth Lea
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.
COMMENTS
Europhile, Derivatives, Mon 19 Oct 09
OOOOOOOHHH the spectre of EU intervention on Britain's economy and policy-making. 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. When A. Darling and G. Brown talk about the need to regulate and reform its a good thing, when it is the EU it is basically evil. MPs in THIS country NOT Brussels were calling for more regulation on Alternative Investment not so long ago. Tired of hearing the same line being peddled by scaremongers. If you fundamentally disagree with anything put FWD by the EU why did you join in the first place?
Add your comment »Remus the shenus, Equities, Mon 19 Oct 09
I'm fed up with all this guff about pulling out of the EU. Fact is, that if we did the £ would plummet and then who would want to work in the City anyway?
Add your comment »Ted, Asset Management, Mon 19 Oct 09
Maybe I am wrong, but isn't the City the EU's financial centre not just the UKs? If that is the case, shouldn't the EU have a say? And if the UK leaves the EU, why should the Europeans remain in the City?
Add your comment »Tom, Research, Mon 19 Oct 09
The centralisation of control over economic activity tends not to be conducive to growth, innovation or liberty.
Competition between different jurisdictions is an important way of maintaining flexibility and helps to discover an optimum level of taxation and regulation.
Ruth is correct. London's competitive advantage is more effectively secured through competition with other jurisdictions, including other EU states, rather than harmonisation and centralised control.
Dominic Connor, Headhunter, Quantitative Analytics, Mon 19 Oct 09
Is it not scary that the one sane voice in government, standing up against the EU for the City of London is Boris ?
If you had told me this 5 years ago, I would have just laughed.
I forecast that before long the voice of British manufacturing will be Ben Elton,.
Doomed, Derivatives, Mon 19 Oct 09
The UK political parties (Conservatives, Labour and Liberal Democrats) are all in the process of doing what the EU cannot even dream of to the financial services industry. Stop blaming the EU. I LIFFE took over 90% of bund trading because of the Bundesbank's reluctance to allow futures on bunds. If you don't want London to suffer the same fate and are not too pro-Dubai or pro-Asia, talk to the 3 main parties.
Add your comment »Thomas, Research, Mon 19 Oct 09
Look Lady, It is obvious that you are British. Stop saying this nonsense. This country need something similar to Glass-Stegall act who had been dismantle by R Ruben, L Summers, L Blankfain in US, and which separate casino gambling banks and financial institutions from retail banking services. Its G Brown has served such a mess in England. He had deregulated city. Thats why entire garbage flew into the balance sheet's banks in city. He should be prosecuted, because he is an idiot like rest of the politicians.
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