Would the City be better off in the long term outside the Single Market?

Question marks linger over the City's free access to the EU through "passporting" (Source: Getty)

Len Shackleton, professor of economics at the University of Buckingham, says Yes.

Policies towards banks and the financial sector are largely based on ignorance, envy and spite – whatever country you’re in. But a UK outside the EU has a marginally better chance of forming sensible policy as slightly more of our politicians have at least a GCSE-level understanding of how finance works.

I imagine that, if we had stayed, over time, we would have become more and more subservient to a European Central Bank determined to preserve the Eurozone at any cost. This would involve further unnecessary regulation, a stonking great share of future bailout costs – and Brussels would probably throw in a Tobin tax for good measure.

Outside, the City will probably lose business in the short run. This is a real concern, and I don’t envy our negotiators. But if we can reassert our independence – and the watchword should be mutual recognition rather than harmonisation – we will retain flexibility for doing business with the rest of the world. Such business is likely to grow faster over the next 20 years than business in most of Europe.

Richard Spiller, partner at Holman Fenwick Willan, says No.

In the last 30 years, the City has developed into the financial capital of Europe, and most major non-European institutions have their European headquarters here. The City’s dominance is partly based on free access to the EU through “passporting”, which is now under threat.

A trade deal will need to be negotiated, which includes free movement of capital and services between the UK and the EU, but there will surely be a heavy price to pay for continued access if it is available at all.

The EU has enormous bargaining power with other countries. While withdrawing from the EU may enable the UK to negotiate treaties with third countries, it cannot match the EU’s bargaining power.

Unless the UK can negotiate access to the EU for financial services, which will surely require it to maintain regulatory equivalence, its influence on the global stage will decline. It is difficult to imagine that being outside the EU will offer any significant advantage.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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