According to the 2013 Global Financial Centres Index (GFCI), London is still the world’s leading financial centre, gaining 22 points on its nearest rival, New York. However, there are many who think that this position of power and prestige is under threat, not necessarily from other rival cities but from something a lot closer to home: EU legislation.
Critics argue that the threat EU legislation poses to the UK is twofold. Firstly there is the actual legislation itself. According to think tank Open Europe, there are approximately 50 proposed EU regulations that would directly impact The City. Among the most discussed is the famous “Robin Hood tax” or Tobin tax that would see a charge being put on every trade between the UK and 11 EU states, even though Britain is not part of the scheme. Another much debated topic is the new regulations capping bonuses at 100% of banker’s salaries and regulating the amount of capital banks must keep as a buffer. All these new regulations may well carry the potential to drive business away from the U.K.
But it is not just the content of the regulations that threatens to topple the UK from the number one spot. In the past, the UK was better able to use its financial strength to negotiate with the EU. Today, the effects of the financial crisis coupled with the new powers given to the EU Parliament subsequent to the Lisbon Treaty (2009), means that The City has lost a great deal of its previous influence and is no longer able to negotiate advantageous deals for itself. This in itself has the potential to drive business away from the UK and towards the Asian markets that have greatly strengthened their positions by, in some cases, copying the UK model. Experts project, for example, that by 2015 Hong Kong will have pushed The City down to third place on the league table through the sheer number of employees in the financial sector alone.
Given this forecast, it is easy to see why Euroscepticism is growing in the UK today. However, it is not entirely certain that a divorce from the EU is the easy solution it is claimed to be. While the defendants of this policy cite the benefits of a UK completely free of cumbersome EU legislation, others warn that the uncertainty alone would only drive even more investment away from the city. At the moment, the wisest move seems to be to wait and see. But one thing is clear, if it wants to preserve its place as the top financial centre of the world, the UK must take a good hard look at its relationship with the EU.
Provided by: Essie; http://essiespeaks.blogspot.com