The truth behind Cameron's veto
Posted: Wednesday 14 December 2011
The effect of David Cameron's refusal to allow the adoption of the EU Treaties on the financial services industry in the UK is unclear.
London is Europe's largest financial sector, with a third of the bank branches in London being European banks. The City's concern was the regulation which the EU intended to bring in, which covered certain financial business only allowed to be transacted in the Eurozone. Essentially, derivative transactions and also the Financial Tax on financial institutions and transactions, were going to have an adverse effect on the City.
We should not lose sight of the fact that the UK Government proposes to impose even stricter regulation than the EU in relation to capital adequacy and ratios. Overall, it is probably doubtful that the veto will mean that the European banks will leave London, as our employment laws are more relaxed and our taxes lighter. The main downside of the veto is that as a country we do not have a place at the negotiation table for what the Eurozone countries will agree for regulation going forward. We cannot avoid the fact that we do a lot of business with the EU.
This is all of course against the background of whether the Eurozone countries manage to avoid the Euro collapse in its entirety, which would have a much heavier impact on the UK financial services industry!
If you would like to discuss this further contact Susan Younger.
