GUEST COMMENT: The EU's threat to jobs in the City of London

19 October 2009

2 minute read

GUEST COMMENT: The EU's threat to jobs in the City of London

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.

AUTHORRuth Lea

Insider Comment

dd
dd
20 October 2009
LOL @ Dominic -- quite
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Th
Thomas
20 October 2009
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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Do
Doomed
20 October 2009
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.
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Do
Dominic Connor, Headhunter
19 October 2009
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,.
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Tom
19 October 2009
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.
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