A European Tobin tax won’t just hit London

Stuart Fraser
FOLLOWING the events of the past few months, there has never been a more important time for London’s financial services industry to build close links with Brussels.

That is why I will be travelling to the City of London Brussels Office’s annual reception tomorrow and why, once there, I – along with the executive director of the European Securities and Markets Authority (ESMA) Verena Ross – will be addressing an audience of politicians and policy makers from across the EU.

Many of our European counterparts are naturally suspicious of the UK and the City in particular; London is without doubt the largest and most international financial centre in Europe and our opposition to European proposals is often viewed from the other side as being motivated purely by self-interest and our desire to maintain a favourable status quo.

Of course, London is a huge asset for the UK and any proposals such as a European financial transaction tax (FTT) or a requirement for clearing houses to move within the Eurozone would impact heavily on us.

However, London – and the financial services industry in general – is also a huge asset to the European Union and each of its 27 member states.

The EU is the world’s leading exporter of financial services. The industry employs nearly 10m people and accounts for 6 per cent of the union’s total economic output.

In addition to these direct benefits, it also has an important role to play in facilitating the broader economic growth that every European leader has identified as a priority.

By unilaterally pursuing policies such as the European FTT, European politicians are – surely unwittingly – pricing all of the EU’s financial centres out of the global marketplace.

Complaining about the impact measures would have on the UK simply will not wash in Europe; highlighting the impact such measures would have across the EU is much more likely to resonate with my audience.

That is the message I will be taking with me to Brussels tomorrow and I would urge our political leaders to follow suit.

We must also be sure to highlight the numerous areas where we share common interests and similar political priorities.

During my time in Brussels, I am hoping to meet with the internal market commissioner Michel Barnier – not many people’s idea of a natural ally for the City of London.

However, commissioner Barnier has prioritised the promotion of a “social market economy, where financial services are at the service of the real economy, and the real economy is at the service of human progress.”

The City shares this priority and I will be talking to commissioner Barnier about ways in which the European financial services industry can work to make social enterprise more appealing to institutional investors.

There are numerous substantial issues on which we can work together for the benefit not just of individual member states but for the good of the common market and the EU as a whole, while also building a more positive relationship with some of our more sceptical European partners.

Stuart Fraser is the policy chairman at the City of London Corporation.