Monday 22 June 2009
The City of London has been “Sold down the Rhine", a group of regulatory experts says today (Monday 22 June).
According to the Regulatory Evaluation Group (REG), part of the Adam Smith Institute, it looks as though Gordon Brown agreed last week to hand over the control of financial services regulation to EU executive committees. UK agencies such as the Financial Services Authority and the Bank of England will monitor compliance with the regulations, but the regulations will be written in Brussels.
According to press reports, France’s President Sarkozy claimed after the decisive meeting “We have agreed a European system of supervision with binding powers."
The REG experts say this is a severe threat to the UK, which presently has by far the largest financial services sector in Europe. However, it will be in a small minority when it comes to voting on the new regulations and monitoring arrangements – just one out of 27 votes.
“Do you recall President Sarkozy threatening to walk out of the G20 unless he got what he wanted? It would appear that he was successful. The EU will have control over the City of London, and with it, a substantial part of the British economy," commented Tim Ambler, Senior Fellow, London Business School, a REG member.
The blueprint for the takeover, says Ambler, was written by M. de Larosière, a former Governor of the Bank of France, and was supported in a letter from Alistair Darling to the President of the EU on 3rd March 2009.
Britain has negotiated some minor opt-outs on the cost of the new scheme, but the Europe-wide regulation plan seems unstoppable, with the EU leaders agreeing a ‘Communication’ – effectively a draft EU-wide Directive.
The Adam Smith Institute plans to publish its response to the EU Communication in a report by regulation experts Tim Ambler and Keith Boyfield, in mid July.
“The timing of this decision is extraordinary," said the Institute’s director, Dr Eamonn Butler. “The Financial Services Authority has not even had time to read the submissions to its ‘consultation’ on the future of UK financial regulation, which closed just last week. It seems that it doesn’t matter what we think about the future of our own financial system, Gordon Brown has already sold it out."
“I predict that many firms currently based in the City of London will be moving to Switzerland, which is bad for everyone in Britain."