The Blog

If We Remain the EU Will Screw Over the City

Despite the City of London being the centre of financial and capital markets, it is under siege from the EU, with the City's continuing success under dire threat. It repeatedly launches assaults upon the Anglo-Saxon banking system, much despised and envied by those on the continent. The modus operandi: over regulation. The desired result: the relocation of the City's institutions to Frankfurt and Paris, no doubt in order to control and manipulate them in the way that only Brussels can.

This certainly doesn't mean that leaving the EU will create a regulatory nirvana for our financial services industry - it won't, as our own regulators are misguided in their agenda to penalise an industry for past mistakes in the hope of risk free markets. That said, at least if we do leave the EU, we can have a government that has the control to bring the regulators back down to earth and act as a positive force for business. It will also work within the same framework which guides the EU, which is set by international bodies such as IOSCO, G8, G20 and the Financial Stability Board, thus ensuring continued access to EU markets and they to ours. And with an immigration system based on skills, it will be able to attract talent from any country in the world rather than principally from the EU.

It cannot be emphasised strongly enough that a vote to remain in the EU is not a vote for the status quo, but a vote for more risk and more harmful regulatory change, little of which can we control. Existing and future regulations and directives with the likes of Basel III, the AIFMD, CRD IV, Solvency II with Solvency III coming and MIFID 2 with MIFID 3 in the pipeline.

There are other deeply unpopular and costly measures already taking hold, such as Financial Transaction Tax and short selling bans. Remaining will mean increased compliance costs, which for small and medium sized firms will most certainly hamper growth and even put some out of business.

We thought that the Financial Transaction Tax (the Robin Hood Tax) was killed off years ago, but it is still firmly on the agenda of the EU Commission. This punitive move achieves nothing, apart from further increasing the cost of doing business and satisfying a destructive anti-business mentality from some member states. Ultimately, as with all taxes, the cost is built into the price and the end user bears the brunt of the cost. The end users of most financial services are pension products and insurance, things that involve the everyday person in the street.

These ill-considered regulations come from a group on people, who are distant from the realities of the financial services industry, people such as the UK's EU Commissioner Lord Hill, who is also in charge Financial Services and Capital Markets within the EU. This man has only ever worked in politics and never in the financial services industry, what does he know? As with having these people hold such positions, you have bad regulations, which come with unintended consequence. Worse yet, the EU doesn't learn from this and when bad regulation backfires, it creates further regulation. Regulation for regulation's sake.

Over half a million people are employed in the City of London. That number extends to over a million across the UK. It is not just these jobs in financial services that are under threat, but the surrounding eco-system that the City supports, such as admin offices for insurance companies in Leeds and Birmingham, to the restaurants and coffee shops that line the streets of London, with all being conducive to a productive and vibrant economy.

These are just some of the regulations that we already know about. What is not widely known is that the EU, through the "Five Presidents' Report", is hell bent on further integration. In its own words it will commit the EU to the creation of a "genuine Economic Union", a "Financial Union", a "Fiscal Union" and a "Political Union" by 2025. This is not in the interest of the UK - the last thing we need is to get bogged down with the problems that will soon engulf the Eurozone.

There is also the issue of the further march towards a fully-integrated pan-European taxation system. Unless we vote to leave on June 23rd, the EU is planning an EU taxpayer identification number, effectively an EU National Insurance number. This also comes with plans to harmonise Corporation Tax levels, which will start with the banning of member states from cutting Corporation Tax below 15%, thus making us highly uncompetitive.

For the sake of the future of the City, let's take back control. Because if we do we can have the best of both worlds. We can trade with the rest of Europe without sacrificing the relationships that we have with Europe. We can continue to refocus our trade policy with a global vision, an initiative which has already increased our financial service exports to the world beyond the EU from 61 to 67%, and compete more effectively with our global rivals, like New York and Singapore. We can be an independent nation and still be able to passport funds through UCITS, due to 'Equivalence' and 'Third Country Status' under MIFID 2.

This is a once in a lifetime chance to change our great City. Let's vote to leave the EU on Thursday 23rd June.