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The Times: EU has jumped gun on City regulation

Although the UK has the largest financial services sector in Europe, it will only have a small voice over EU regulations

Sir, We are concerned that hasty agreement to EU proposals for financial services regulation has pre-empted the discussion of what would be best for the EU as a whole. David Charter’s article (“Jubilant Sarkozy sees EU take powers over the City", June 20) appears to confirm the handover of financial services regulation to EU executive committees. Monitoring UK compliance with the rules will be largely left to the British Financial Services Authority (FSA) but the rules themselves will be written in Brussels. For the time being the UK has by far the largest financial services sector in Europe, but it will only have a small voice, just one of the 27 voting members, in determining what the new rules will be and how supervision takes place.

Due process seems to be flouted: the FSA’s call for consultation on this matter closed only last week with some organisations being given more time and the EU consultation on the communication closes in mid-July. We support the internationalising of financial services regulation but moving the regulation of one of the largest and most sophisticated markets immediately to a body with executive responsibility for a miscellany of markets in different stages of development threatens to undermine EU financial services competitiveness in the world market.

The EU formal legislative process has only progressed as far as a communication, albeit effectively a draft directive. The Treasury has yet to issue a draft British Impact Assessment as it should have done by now. The EU Impact Assessment fails to make the case for these changes, still less to quantify costs and benefits of this new agreement for the EU.

Next month the Adam Smith Institute’s Regulation Evaluation Group, of which the undersigned are members, will publish its full response to the EU communication in the form of a report that considers the optimal financial services regulatory arrangements for the EU as a whole. The blueprint for all this was written by a team led by a former governor of the Bank of France, and supported in a letter from Alistair Darling to the Commission President, dated March 3, 2009. It would appear that agreement in principle was the price of French involvement in the recent G20. The UK Government appears to have negotiated some minor opt-outs, such as the EU committees not being able to commit member state governments financially but to claim credit for recovering £1 from £100 given away is perverse.

London’s pre-eminence as a financial centre is as dependent as ever on its fiscal and regulatory environment. As a result of the pending increase in the UK marginal tax rate to 51.5 per cent, including national insurance, we know a significant number of firms were already considering moving to Switzerland. The prospect of this takeover of financial regulation can only hasten this exodus.

Tim Ambler, Eric Anstee, Keith Boyfield, Eamonn Butler, Tom Clougherty, David Foxman, Michael Green, Richard Jeffrey, Hugh O’Donovan, Edmond Robinson, Mike Waterson

Adam Smith Institute, London SW1

Published in The Times here

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Daily Mail: UK's £230bn budget gap equals 'biggest' hole in economy

Analysis from the Adam Smith Institute shows British taxpayers would have to hand over every penny they earned between January 1 and June 25 to pay for this year's vast public spending programmes.

Published in the Daily Mail here.

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The Times: Professor Norman Gash: historian and biographer

Several of Gash’s protégés, who included Michael Forsyth (now Lord Forsyth of Drumlean) , were later to provide powerful suppport to Thatcherism in the 1980s as MPs or leaders of the influential Adam Smith Institute in London.

Published in The Times here.

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MoneyMarketing: Passing the buck?

moneymarketingThe Adam Smith Institute has slammed the FSA’s response to the financial crisis, saying its failure to recognise the extent of its own failings compromises its ability to improve regulation.

Authors of the report Tim Ambler and Keith Boyfield say the central problem is the FSA's "self-obsession and self-justification". Their report, Regulatory Myopia, says the FSA should be streamlined, rather than expanded, and core responsibilities should be given to other bodies. Adam Smith Institute director Eamonn Butler says: “Instead of being expanded, the FSA should be scaled back to what it can actually achieve, and more weight given to existing market-restraint structures, such as the Financial Reporting Council, the Accounting Standards Board and non-executive directors."

The report claims that the FSA has introduced “red herrings" such as international responsibilities, hedge funds and offshore funds to distract readers from its own responsibility in the crisis.

Should the FSA be scaled back and supervision of the banking system be given to the Bank of England? How can the performance of the FSA be judged moving forward to minimize further regulatory failings? And who should the FSA ultimately answer to on a formal basis?

Published in MoneyMarketing here.

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Cambridge News: State of the nation

By his own admission, Eamonn Butler spent several fruitless years trying to generate enthusiasm from publishers for his book chronicling what he perceives as our nation's decline from sceptr'd isle to septic embarrassment.

But even he could scarcely have imagined how, when it did eventually see the light of day, T he Rotten State of Britain would end up chiming so perfectly with the funereal mood of the times.

In the book, Butler takes a forensic scalpel to all aspects of modern British society, from the broken economy to abuses of political privilege via the rise of spin, surveillance culture and the nanny state...

Published in Cambrideg News here.

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Evening Standard: City Spy: Now Ronaldo is top of M&A league

Vincent de Rivaz, CEO of France's EDF Energy, spoke at the Adam Smith Institute's Nuclear Industry Forum. “When I arrived, they told me you were on strike," he declared. “So I thought Well, at least we have something in common!'." Adam Smith director Eamonn Butler replied by telling him about the new French version of The Apprentice — it's the same, except you can't fire anyone.

Published in the Ebening Standard here

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Daily Mail: Banks line up a counter-attack

Daily_MailA paper co-written by Tim Ambler, a senior fellow at London Business School and Keith Boyfield of Adam Smith Institute, today argues that it is 'scandalous' that directors whose banks have been rescued by the taxpayer are being permitted to carry on paying themselves generous salaries.

Bankers whose institutions have effectively failed should be permanently expelled from the industry, they say.

Published in the Daily Mail here.

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Financial News: Think tank slams Turner report

financial_news_onlineAn influential think tank has slammed the UK’s financial regulator and called for more powers to be handed to the Bank of England, piling further pressure on the Chancellor of the Exchequer ahead of a speech tomorrow night, in which he is expected to outline his plans for the oversight of domestic markets...

Published on Financial News here

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Guardian.co.uk: True Boris

guardian.co.ukAnd now Boris has been bollocked at the Adam Smith Institute blog for supporting the London Living Wage. Dissident Lib Dem (and Bromley Councillor) Tom Papworth:

Before he was elected he wrote how minimum wage laws drove "up your costs and greatly [reduced] your ability to reinvest". Yet...in July 2008 [after he was elected] he described how "the living wage...is not only morally right but also makes good business sense, contributing to better recruitment and retention of staff, higher productivity and a more loyal workforce with high morale." How times have changed!

For an economic liberal's critique of the best known advocate of free markets in British politics, read on here. Recommended for all Boris-bashers on the left who've yet to detect that he's not turning out to be quite the political animal they warned us about.

Published on guardian.co.uk here

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