WE’RE doing the Euro hokey cokey: in, out, in out, shake it all about. We were out, we’re now in, we might be out again, but in the meantime we are certainly shaking it about.
Indeed, the reaction from other governments is that the UK is shaking things up far too much. Like everyone under the age of 55, I have never been able to vote on the UK’s relationship with the EU, and am glad I now will. But we are certainly entering uncharted territory. Only Greenland has so far left the European Union, after a row over fish. But in this – as in so many other things – Greenland holds few lessons for us.
It is easy to understand the British public’s anxiety over the EU. Its reach into our daily lives has increased. It has problems, not least with the Eurozone. It comes up with policies that are clearly detrimental to the economy, such as the recently announced financial transaction tax. This is basically a tax on consumers – but will thankfully only apply to the countries who opt in.
But despite all this, there is a reason why business groups, including the British Bankers’ Association, were queuing up yesterday to stress the importance of the UK’s membership of the Single Market. The tearing down of trade barriers, and the creation of a (more) level playing field across a market bigger than the US, has helped boost exports and inward investment. The UK – and London – has been a particular winner from this.
The increasingly-integrated single market in financial services has enabled UK financial service companies to win business across the EU, consolidating London’s position as Europe’s financial centre. It has created a far more integrated market in capital, with surpluses in saver countries, like Belgium, helping fund investment in countries such as the UK – to the benefit of both savers and investors.
It has meant that global companies can have their European headquarters (and the vast bulk of their operations) in London, and simply passport in their services across the EU via what are essentially sales offices. If Britain lost its access to the Single Market, it would almost certainly lose many of those international banks.
It is not just important that the UK is in the Single Market, but also that it can influence the rules that the market operates by. Roughly 80 per cent of financial services legislation comes from the EU, and it is vital to UK financial services companies that their government is sitting around the table helping write the rules.
As we plunge into a prolonged national debate about the pros and cons of EU membership, we must ensure that anger about the downsides doesn’t blind us to the upsides.
Anthony Browne is chief executive of the British Bankers’ Association.