EU states want a share of UK financial services industry

Speaking to George Parker of the FT, on the Tories’ plans for financial regulation.  Osborne criticised the EU’s plans because the EU failed to understand the nature of the City’s business. Nigel Farage made the same point, recently.

George Osborne raises a valid point – one which has bothered me for some time. Frankfurt has long hankered for a piece of the UK financial services action and it has its beady eye on the LSE, so keen is it to knock London off its number one perch.

FT: You talk about international corporation; and obviously you’d like to work through the financial stability forum and international organisations? What about the European Union? What do you think of what’s coming out of Brussels, at the moment?

GO: Well, I think a lot of it is ill-conceived, and badly drafted. I think the hedge fund directive, the alternative investment directive, is a case in point. I think that is immensely damaging, without actually protecting the European consumer, or the European taxpayer. So it fails on both fronts, and I see a complete absence of the British Treasury, over the last year, out there in Europe, in Brussels, arguing the case for Britain as the home of European wholesale financial services.

And I think there’s a none too subtle agenda from some, to try and diminish Britain’s share of this European business, and I think the Treasury needs to be out there, fighting as hard as the French fight for their small farm holdings, and the Germans fight for the luxury car market, and we should be out there. Now, how do we do that? First of all, I think the chancellor of the exchequer should turn up at Ecofin, and turn up, not just for the actual meeting, but turn up before and stay afterwards and …

FT: I’m going to write that down!

GO: Yes of course, I forget you’re a Brussels veteran. But I just don’t think we’ve put enough negotiating weight there. And one of the things we proposed we were going to do in this White Paper, is create for the next couple of years, while a lot of this legislation is conceived in Europe, a treasury minister who is based out there in Brussels for a large amount of his time, or her time; so, a minister for European regulation; a treasury minister who’s going to be based in Brussels arguing the case, with the help of UKREP for British financial services.

FT: Do you agree with the principle of having European level standards and rules?

GO: What I think is you should have European coordination of national regulation. So, just as there is international coordination of national regulation, I am against an executive pan-European regulator with executive powers to pose any regulatory answers. And I think that is bad news for Britain, because I don’t think there’s a sufficient understanding in the Commission, or indeed, in the rest of Europe, of some of the complexities of wholesale financial services. And, as I say, there is a none too subtle agenda by some other member states to get a share of Britain’s financial services industry, and use the credit crunch and the so-called crisis in Anglo-Saxon capitalism, as an excuse to grab some of our business. And we need to fight our corner hard

So yes, engage in Europe. Make sure the European regulation is right. We want an internal market in financial services, in fact a Conservative MEP has just been appointed as chairman at the Internal Market Committee in the European Parliament, which by the way gives the lie to the idea that the Conservative MEPs were going to be marginalised in the European Parliament. It’s one of the most important committees.

And what is Labour saying or doing about this EU member states’ grab for British business?

Nothing.

What is Labour doing fighting our corner against this ridiculous EU legislation?

Nothing.

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