When the spectre of Britain leaving the EU is raised, big financial institutions would rather see the UK stay in and fight its corner than depart.
David Cameron’s government has long seen itself as a sort of knight errant with the City playing the role of the damsel in distress. Two years ago, the prime minister vetoed a European treaty when other Member States refused to agree to specific safeguards aimed primarily at protecting London’s financial markets.
But this betrays a misunderstanding of how the crisis has changed the regulatory landscape. London’s advantages as a financial centre were never down to the light-touch regulation of the boom years, and tougher rules will not dull the attractiveness of the sort of finance the UK should wish to host. Since the crisis Britain has been at the forefront of regulatory reform, intellectually and in practical terms. Brussels is less likely to weigh on UK regulators to be tough on banks than it is to force other countries to catch up with UK standards. Britain’s voice on regulation has in the main been magnified by its engagement in Europe – not drowned out.
A desire to preserve this voice in an uncertain world explains why bankers are prepared to risk “more Europe” rather than take their chances outside. The City accounts for 37 per cent of wholesale business done in the EU – activity that supports hundreds of thousands of jobs in London and beyond. Britain’s global banks have everything to gain from more uniform rules than a retreat from a single financial market. This applies both to the EU and their relations with the wider world.
There remain plenty of potential pressure points. The antipathy of some Member States to finance could lead to more onerous rules in future, or regulations being interpreted in ways that disproportionately hurt London. The way to deal with this threat is not to reach for some illusory emergency brake or opt-out, however. If Britain wants to influence the emerging rule book, it must build alliances and shift the debate in its direction.
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See also: Nestlé Chair Warns Over UK Exit From Europe © Sky News
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