Britain’s Financial Services Industry in a Changing Europe. A Policy Network Report for the City of London Corporation

Financial services are the focal point of the debate about Britain’s future in the EU. The sovereign debt and banking crises have accelerated integration in the Eurozone, a trend often seen as alien to British interests. The position of the City as the main financial services centre in Europe has become uncertain.

In this new report, Policy Network seeks to provide a detailed assessment of the current situation and to offer guidance on how to pursue the objective of maintaining a strong financial sector in London as a key component of an integrated Single Market and a competitive EU.

Drawing on primary sources and over thirty interviews with senior experts and politicians in key partner states across Europe, the research disproves the claim that the UK is being structurally marginalised in the field of financial services regulation. The Eurozone agenda has not significantly encroached on the Single Market so far and London can count on several like-minded allies across the EU, who are keen to defend the City as Europe’s main financial centre. However, in a quickly changing environment, this situation cannot be taken for granted.

In this context, the City and leading UK politicians should join forces to:

+ Improve further the perception of London-based financial services as a force for growth and jobs across the EU, and as a key asset in an integrated EU Single Market.

+ Upgrade the UK’s presence and leadership in Brussels by building on close ties with like-minded member states. Moving from a reactive to a preventive and agenda-setting position seems particularly paramount in that respect.

+ Pursue an EU reform strategy on a multilateral basis and within the framework of existing treaties rather than seeking to obtain national safeguards. The change in EU leadership next year gives momentum for a political agreement that would include a more focused policy agenda; better application of the subsidiarity and proportionality principles; and a greater role for national parliaments.