FEAR is stalking parts of the city that Brussels is determined to undermine its competitiveness. But ask any senior banker or businessman what particular measure it is that Britain needs saving from, they draw a blank.
The implementation of a Financial Transactions Tax (FTT) in the EU alone, and not on a global level, would deal a severe blow to the City of London. With 80 – 85 per cent of the tax gains coming from the City, London would be disproportionately affected. With London accounting for up to an estimated 80 per cent of the EU’s financial services and with 12.1 per cent of the total government receipts for all taxes in the 2010/11 financial year, according to the City of London’s recently released figures, the Government, and London Mayor Boris Johnson are absolutely right in fighting this levy.
Fortunately it is unlikely to happen because of the simple fact that any move to create a European-wide tax policy of any sort – including the FTT - requires unanimity amongst all 27 EU member states. This of course does not mean that we must not remain vigilant to moves to bring in something similar through the back door. The adoption of a value added tax, for example, merely requires a simple majority in the European Council.
Much other EU-wide financial regulation is not subject to veto but what is less well known is that Margaret Thatcher agreed to the use of Qualified Majority Voting (QMV), at the behest of Leon, now Lord, Brittan, in 1986 to create the Single European Act.
Thatcher and Brittan quite rightly knew that a true Single Market could never be established through unanimity.
Even with the use of QMV, the UK has been winning in Europe on financial services ever since. Despite at times abstaining, we have not lost a single vote on financial services legislation in the Council whilst others, such as Germany, have. This record is testament to British negotiating skill, UK technical expertise in financial services which is (perhaps grudgingly) acknowledged in European capitals, and through the building and maintenance of partnerships and alliances with other EU partners. With up to forty pieces of legislation currently in the pipeline in the European Parliament with a direct impact on the prosperity of the City, the UK needs these alliances, and that skill, more than ever.
London is a global financial centre. Too often we forget that London is also Europe’s financial centre, with, for example, 75 per cent of euro derivative trading taking place here. There are undoubtedly those in other European cities who would like a piece of the action but with London's critical mass, as long as we continue our engagement in financial regulations they are unlikely to succeed.
Britain has been fighting its corner in Europe on financial services, whether through the blocking of an ill conceived FTT or the Chancellor rightfully taking the European Central Bank to court over a planned ban on euro-denominated security trading outside of the eurozone.
These gains can be won by working with our friend and ally, the European Commission. We must therefore continue to pursue and advance our agenda and not be sidelined.
What people fail to understand is that Britain has got so much going for it. We have the skill, experience, potential allies and above all the arguments to make Europe work for us. It is therefore absolutely essential that we have the self-confidence as a country, to step into the arena of European negotiations and make those arguments.
Tomorrow sees the first meeting amongst the 26 countries which signed up to an agreement on the eurozone on 9 December. Only the bare bones have so far been agreed, and there is an awful lot to fight for as the Dutch, Swedish, Irish and Czechs, to name just four are pointing to difficult ratification processes in their own countries to extract the best deal for them. Britain will be an observer.
Angela Merkel has already said that she wants the new agreement to be incorporated into the treaties. That can only happen with Britain's agreement. So we, to put it bluntly, still have something they want.
We can ask for assurances on the integrity of the single market, insist that the European Banking Authority stays in London, and have written into the treaty that when a measure has a disproportionate impact on a particular member, every effort should be made to secure that member's agreement.
People across the continent are staring at us in disbelief as we appear to go through a crisis of confidence. There is a deal there to be done - Britain must shake itself down and get back in the room.
Perhaps when it comes to the City and Europe, Franklin D. Roosevelt had a point. The only thing we have to fear is fear itself.
Roland Rudd is chairman of RLM Finsbury and Chairman of Britain for New Europe and was a judge for the CityA.M. awards 2011.