LAST week, the chancellor of the exchequer, George Osborne, made it clear that badly thought through regulation must not be allowed to undermine European competitiveness in financial services.
Such a strongly worded public statement provides further evidence of the government’s belief that the financial services industry has a vital role to play in facilitating a period of strong, sustainable economic growth.
It also demonstrates government determination to place the UK at the heart of European policy making.
In addition to key legislative proposals on short selling and over-the-counter derivatives, 2011 will see the establishment of a new European regulatory framework, plus further stress tests on banks and a number of measures designed to ease market concerns on sovereign debt.
While the City accepts, and welcomes, measures designed to bring greater stability to our financial markets and reduce excessive risk taking, we need better and smarter regulation, not more regulation. Above all, our businesses require predictability in their operating environment.
The City of London Corporation has long made the point that Britain needs to engage earlier in the policy-making process. This will help avoid our international competitiveness being threatened by regulatory proposals underpinned by national self-interest and political points scoring rather than consultation and comprehensive risk and impact assessments.
Creating a level playing field in Europe is all very well and good, but it is the ability of European financial centres – of which London is by far the largest – to compete against financial centres in the US and in the emerging markets of Asia that will define our global standing long-term.
We must not take unilateral action that is out of step with global agenda, no matter how politically expedient such a course of action may seem.
As a single economic entity, the EU represents one of the most important trading and commercial partnerships in the world. Our key shared objectives are more likely to be taken into account if the 27 member states work together and speak as one.
Once a consensus has been created, the EU must act to ensure that the implementation and enforcement of these measures throughout the world remain true to the spirit of the agreement, as well as to the letter of the various communiqués.
The fact that George Osborne is making these points in the public arena will doubtless have a positive impact. The UK is open to business from around the globe, and both the chancellor and I will be making this point when we meet the Chinese vice premier, Li Keqiang, later today.
Michael Bear is Lord Mayor of the City of London