Should the City be afraid of Europe?

The answer – at least for Lib Dem MEP and Chair of the European Parliament’s Economic and Monetary Affairs Committee Sharon Bowles – is a very resounding no.

Speaking at a Policy Exchange event on the relationship between the EU and the City, Bowles reasoned that the EU could only be regarded as a threat to the City if the UK was to leave the union. If the UK was on the outside it would be compelled to comply with EU standards in order to operate there, while at the same time having no say in what those standards were.

For Bowles, the core point is thus that the EU will go on making FS regulation that affects the UK whatever the UK decides to do: so it’s better to be in than out.

Bowles also made no suggestion that the wider political context – with ongoing concerns about the viability of Greece’s membership of the Euro and worries over spending in Spain, Portugal and others – in any way threatened the EU’s existence.

Perhaps unsurprisingly for a europhile Lib Dem MEP, she was also highly critical of the UK Government for it’s approach to Europe. She said that David Cameron’s decision to use the UK’s veto last year had caused a ‘hangover’ in Europe that remained to this day, and that if the UK used it’s veto again it would be ‘friendless’.

Within FS, Bowles said that the UK continues to suffer from an image problem of a different kind. She argued that many other EU states still blame the City for ‘contaminating’ the rest of Europe with bad financial products and lassiez faire regulation in the run up to the crash. This manifests itself in pan-European concern whenever the UK argues for greater flexibility at a national level – with member states concerned that the UK will loosen regulation on the City even if at times the UK is keen to be able to go further than the EU allows.

So while Bowles’ was clearly confident that the City isn’t specifically under threat from the EU, it’s pretty obvious that the City and the UK face some tough challenges ahead.

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