A tidal wave of rules, covering areas from derivatives trading to the location of clearing houses and short-selling to insurance, will hit the UK disproportionately hard, think tank Open Europe warns today in a comprehensive report underlining the creep of European financial legislation.
John Redwood, the influential Conservative MP, told City A.M. the “onslaught of regulation” would damage the UK and warned there could be a Tory rebellion if David Cameron does not do more to fight for Britain.
As the City contributed £53.5bn in tax in 2009-10 – around 11 per cent of total revenues – and generated a substantial trade surplus, Open Europe argues it is vital that the UK government has a larger say in any new regulation.
“Cameron would be right to use EU treaty changes to ask for an emergency brake to halt regulation that could harm financial services and the wider economy,” said Open Europe.
Redwood added: “It is vital to protect financial services. They are a valuable asset in terms of jobs and tax revenue, and we need an opt-out to protect them,” he said.
“The government should not try to postpone a renegotiation. Other countries need us to pass changes, so it is time to use our leverage and say the relationship doesn’t work any more.”
Redwood believes a majority of Conservative backbenchers agree with him, threatening Cameron’s leadership if he fails to use this opportunity to support British interests.
Luke Johnson, chairman of Risk Capital Partners, said Europe’s proposed financial transaction tax was “particularly damaging” .
He added: “This is a good chance to stop these populist, xenophobic proposals before they fully take hold.”
The City of London Corporation also warned against protectionism and said the financial transaction tax would cost hundreds of thousands of UK jobs.
Meanwhile, Iain Duncan Smith, the work and pensions secretary, has called on the Prime Minister to hold a referendum on plans for greater fiscal union in the Eurozone, it is understood.
The former Tory leader and a standard-bearer for the right of the party said that any “major treaty change”, such as the one being devised by France and Germany, should be put to a public vote.