The City Corporation hosted a gathering at the Guildhall last Thursday to discuss, from a financial services perspective, what the Prime Minister should be seeking in his EU negotiations and the consequences of Brexit, should that come about. The eight invited speakers were supposed to be balanced between those leaning towards staying, the Inners, and those leaning towards leaving, the Outers. Given the funding, it was no surprise that the majority were Inners. Indeed, according to Mark Boleat, Chairman of the Corporation’s Policy and Resources Committee, who introduced the conference, the status quo is well-nigh perfect so far as the City is concerned. Apparently, the Brussels regulators now follow the City’s advice like lambs following their shepherd. Perhaps the single market for financial services could be hastened a little but the important thing, we were told, was to remain within it. Dr. Pangloss would have been proud.
Interestingly, the few words of dissent from the Outers produced more applause than anything from the Inners. But this was shadow boxing. There was little attempt to answer the questions: just the ritual “leaving is too risky” and “Europe will drag the UK down in global terms” arguments from the two sides. The only speaker to land a punch was David Campbell Bannerman, ex-UKIP and now Tory MEP, speaking from the floor and dismissing one speaker’s contribution as undiluted self interest.
In essence, the big companies and organisations, City Corporation, CBI, unions, Whitehall, are mostly Inners whereas SMEs, including those in the City, and their representatives, IoD, Chambers of Commerce, are mostly Outers. Some portray that as the old guard versus the future.
There is a vague wish that the UK government can protect the City in the way the French protect the Common Agricultural Policy but no one suggested how that could be done.
The most substantial issue proved to be the Euro. The double majority rule that protects the non-Eurozone countries from being out-voted by the Eurozone ceases to apply once the current seven of the former shrink to three. Furthermore, the other EU members have made it clear that they dislike the principle and even Lord Hill, the UK Commissioner, would not support it being extended to non-financial matters. Since, when the current troubles subside, it is a racing certainty most of the current outsiders will join the Eurozone, the UK can look forward to being out-voted on almost everything and losing out, as we now do, in the EU Court of Justice.
So the bottom line, whatever the outcome of the referendum, seems to be that the UK must, in the longer term, accept the Euro or leave the EU. A stark choice.