Bank of England chief Mark Carney last night warned Brussels against stepping on its toes, in a highly-anticipated speech on Britain’s EU membership.
Carney warned that inflexible financial regulations are making it harder for the Bank to watch over the UK’s financial centre. He took aim at the EU’s bankers’ bonus cap, arguing that it is “restricting the proportion of pay that can be clawed back in the event of excessive risk taking or poor conduct, thereby weakening discipline from remuneration.”
In a speech in Oxford, Carney also criticised the EU’s regulation of insurance companies, and warned against Brussels tailoring financial rules to fit the Eurozone and ignoring non-euro members.
“Actions to complete European Monetary Union should be taken with regard to their impact on all members of the European Union,” Carney said.
“From the Bank of England’s perspective, steps to ensure financial stability for those within the euro area should not impede the achievement of financial stability for those without.”
Carney called for “clear principles to safeguard the interests of non-euro member states.”
Chancellor George Osborne praised the remarks. “Mark Carney’s very impressive speech sets out how EU membership has made the British economy more open and dynamic, but as the Eurozone integrates we need to safeguard the interests of non-euro members like Britain,” he said. “That’s why these safeguards are at the heart of our renegotiation.”
Osborne recently wrote exclusively in City A.M., saying: “One of the greatest threats to the City’s competitiveness comes from misguided European legislation, so a central demand in our renegotiation will be that Europe reins in costly and damaging regulation.”
While Carney insisted he would not take sides on the coming referendum, his speech emphasised the advantages Britain has gained from being a member of the EU.
“Broadly speaking, the evidence suggests that the UK has successfully harnessed the benefits of openness afforded by EU membership while avoiding some of the drawbacks of reduced flexibility from which some continental European economies suffer,” he said.
The Vote Leave campaign said the speech “sent a clear warning about the dangers of Eurozone countries giving more power to Brussels”.
The Britain Stronger in Europe campaign said the governor had "overwhelmingly made the case that our membership of the EU single market increases our stability, our dynamism, and our economic growth".
“I wonder if this speech is directed at the banks who have said that if the UK leaves the EU, they would leave the UK,” Gina Miller, founder of SCM, a London-based investment firm, told City A.M.