Mark Carney’s intervention in the Brexit debate today will have nothing like the impact his remarks before the Scottish referendum had last year.
Arguing that the SNP’s plan to keep sterling would require “some ceding of national sovereignty”, while pointing to chaos in the Eurozone, he swept aside the misplaced belief that independence could be achieved without risks.
Although it will be interesting to hear the Bank’s view of how the EU affects its ability to manage the economy, it is unlikely to change many minds. Carney should take the opportunity, however, to correct the assumption that the EU is universally positive for the City.
Yes, the commanding heights of financial services – the big international banks – have stated that membership is a key factor in London remaining a global centre for finance. Indeed, according to one measure, 40 per cent of the capital’s financial services are exported to Europe, so keeping markets open is vital. Finance also thrives on liberal access to foreign talent.
But to maintain that the EU is entirely good for the City is wrong. First, sectors such as insurance have only recently begun to feel the pinch of draconian EU rules that damage their ability to operate globally.
Earlier this month, Prudential warned that it might have to move its domicile from London due to the compliance costs of Solvency II. L&G chief executive Nigel Wilson has also said Britain should not be afraid of leaving if it doesn’t get a better deal.
Second, it is becoming increasingly clear that the government’s aim in its renegotiation of protecting the City against collusion by Eurozone nations is not getting very far.
There is no confirmation that finance will be shielded from illiberal moves such as the bonus cap. The City should be afforded the same level of importance as France’s beloved agricultural sector.
When it comes to Britain’s membership of the EU, few people today are arguing in favour of the status quo, but there are those who claim that an imperfect relationship is better than no relationship at all.
This is a claim that should be challenged. City A.M. will keep up the pressure on both sides of the coming referendum campaign, ensuring that City interests are heard loud and clear.