City Matters: Why the City must vocally support crucial reforms to the European Union
ANOTHER week, and another chapter in the debate over the UK’s membership of the EU. The first report from the government-commissioned study into the balance of competences between London and Brussels, released last week, claimed that the status quo is broadly correct in six key policy areas.
But perhaps more significantly, Japan and Australia also underlined the importance of the UK’s access to the Single Market for continued inward investment into the future. This comes after similar comments from Barack Obama on behalf of the US earlier this year.
The government is absolutely right to gauge the opinions of our international partners as part of this heated debate. London is home to around 1,400 majority foreign-owned financial services firms from 80 countries – with over 250 foreign banks.
These firms rely on London’s access to the Single Market and its 500m consumers. If this access were removed, some of them would seriously consider gradually moving existing product lines and new business to other financial centres. And this would put at risk some of the 2m jobs sustained by financial and related professional services across the UK.
It is true that the centre of economic gravity for trade and investment is shifting. Asia and Latin America are becoming increasingly important as they grow rapidly. But the opportunity to access new markets does not mean that the UK should slam the door shut on an existing partner. Our ability to bid for new business in Asia and Latin America is strengthened by our position as the gateway to Europe.
Other countries very much value the UK’s contribution to the EU. They want us to remain inside, and indeed to be more fully engaged than at present. Building alliances and using diplomacy to its full effect is the only way we can get better outcomes from our membership. Britain’s successes in recent EU negotiations have been achieved by quiet diplomacy, such as at the December summit on banking union and the February meeting on the EU budget, not by non-participation in the debate.
This does not mean that the UK’s relationship with the EU should remain frozen in time, of course, and neither should the EU. Dame Helen Alexander, former president of the Confederation of British Industry, recently outlined the key reforms that the EU needs to pursue: complete the single market, focus on free trade, create a Europe of enterprise that works for entrepreneurs and small businesses, make sure the single market in financial services for all 28 members is not undermined as the Eurozone resolves its problems, and make the EU far more efficient.
The City needs to be vocal in supporting the delivery of these reforms in order to help ensure the EU is fit for purpose. Only then can we close the book on the heated political debate about Britain’s membership of the EU.
Mark Boleat is policy chairman at Canada Corporation.