Q. SO CAMERON SAFEGUARDED THE CITY FROM BRUSSELS’ RED TAPE, RIGHT?
A. Well no, not necessarily. Cameron also wants UK authorities to have the power to impose “gold-plated” regulations on the financial sector, including capital requirements that go even further than the proposed maximum discussed by the European Union. However, the Prime Minister did push for the reinstatement of vetoes over potential shifts in power to EU financial authorities, which could pose a threat to City firms in the future. He also wanted to stop City firms that do not trade with other European countries from being affected by European legislation. Many financial companies from outside Europe are based in London.
Q. DOES THIS MEAN THERE WON’T BE A TOBIN TAX ENFORCED ON THE CITY?
A. Not a lot has changed on this front. The UK already had a veto over a financial transactions tax being imposed across all EU states. The potential for the tax being snuck in through the back door, under the guise of it being a VAT measure, has been generally dismissed.
Q. WHAT HAPPENS NOW?
A. Talks will progress with an agreement likely between the 17 Eurozone states, and some EU states outside the single currency, albeit after more political wrangling and legal complications. One major part is a fiscal compact that would restrict euro-member governments to only small budget deficits. Doubts still remain over the feasibility of enforcing such measures. “Already, such proposals have floundered in the Austrian parliament, where a large majority is required to make constitutional changes,” noted James Goundry of IHS Global Insight. Current proposals would see enforcement overseen by the European Court of Justice.
Q. HAS CAMERON HINDERED OR HELPED THE CITY’S POSITION?
A. Many Eurosceptics are delighted with Cameron’s seemingly-tough stance, yet the think tank Open Europe -- which campaigns for a more economically liberal EU -- warned: “There are valid concerns that Cameron received no clear safeguards while spending a lot of political capital.”