Monday, July 06, 2009

Euro-nonsense

Euro-nonsense

This is a standard ‘in it to win it’ europhile piece of a sort you could have read at any time since about 1965.  It’s argument is simply that if Britain left the European Union it would still have to comply with all European regulations or have its products banned from sale. 

One only has to look at the financial services industry to see the risks. If British-based providers of financial services wanted to do business in the single market, they would have to abide by whatever regulations the rest of the EU dreamed up. These would certainly be more restrictive in the absence of British involvement. At a time when other EU governments see an opportunity to cut London down to size, would it really make sense to be a bystander?

But this is nonsense.  In fact, it’s an inversion of the truth.  Britain exports financial services to the world, not merely to the EU.  Do we have to abide by global regulations?  Do we hell.  If the EU wants to impose highly restrictive regulation on financial services that’s not bad news for the City – it’s the best news imaginable.  Look at what happened in the aftermath of Sarbanes-Oxley.  Public listings in the US fell, while those on the LSE soared.  The extremely restrictive US laws on securities (ERISA and the SEA) have meant that the world capital for bond issues is London (or was until recently).  The last thing that we need to do is engage in trans-national regulation if our aim is to maintain our competitive advantage.

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