UK can bolster City's defences with charm offensive, says Myners
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
Sponsored Content

UK can bolster City's defences with charm offensive, says Myners

Britain should launch a diplomatic charm offensive in Europe’s capitals to protect its financial services sector from possible regulatory changes inside the European Union, former City Minister Paul Myners has said.

Lord Myners said Britain should become more, not less, involved in efforts to create a banking union designed to supervise banks and provide a backstop, or risk getting lumbered with rules that could damage the City. "The danger for the UK is increasing marginalisation. As the European Union divides into those inside and outside the eurozone, there will be profound consequences for Britain," he said.

Concerns are growing in the Square Mile and Whitehall that some eurozone members are trying to grab a significant slice of the City’s euro-denominated trade by suggesting that the ECB can properly regulate trade in the single currency when it is done within the eurozone’s boundaries. Those concerns were heightened by French central bank governor Christian Noyer’s comment that he could see "no rationale" for London as the euro’s financial centre. Currently, over 40 per cent of global euro FX trade goes through London.

"There is a concerted push by people who believe in a quite straightforward way that access to a lender of last resort should naturally be focused within the euro core and I don’t think there’s much we can do about this. The best strategy for the UK is for us to be seen to be as helpful as possible. The Treasury should consider permanently basing a Junior Minister in Brussels to develop closer relations with the Commission and our European Partners."

Myners said he was seeing increasing annoyance with Britain from European policymakers. What London now needed was an old-fashioned charm offensive.

"Being seen to do the right thing can be enormously successful. What did David Cameron´s walkout (of an EU summit) last December achieve? Nothing, other than alienating others."

City Minister Paul Myners

The British Government has said the EU’s single market rules will prevent the eurozone dictating where euro trading can take place. However, the final outcome may also depend on how a future European banking regulator interprets its mandate. That regulator is the first leg of a nascent banking union – an initiative Britain supports for the eurozone, but has ruled out joining itself. Chancellor George Osborne should appoint independent experts to assess the case for British membership of the banking union, said Myners. But he added there was virtually no chance that Britain would sign up to the supervisory body.

"In the end, regrettably, the decision on where Britain stands in Europe will not be taken based on a careful calculation of the pros and cons, but a response to naked domestic politics."

Financial services account for 11 per cent of British exports. However, Myners played down any doomsday scenario for the City, whatever happens.

"The sheer energy, ingenuity and talent in London and its network of institutions make it very difficult to move the centre of euro trading to Frankfurt or Paris."

"But will London be as dominant in Europe in 20 or 30 years? Probably not. We are going to see the development of greater depth in Frankfurt and Paris in the same way that London is going to be less dominant vis-à-vis Mumbai or Shanghai."

Lord Myners was speaking ahead of an RBS Insight event with clients. 

For more RBS Insight content, click here

Disclaimer

The statements and opinions expressed in this article are solely the views of Lord Myners speaking at an RBS Insight event on 4 December 2012 and do not necessarily represent the views of the Royal Bank of Scotland.

The contents of this document are indicative and are subject to change without notice. This document is intended for your sole use on the basis that before entering into this, and/or any related transaction, you will ensure that you fully understand the potential risks and return of this, and/or any related transaction and determine it is appropriate for you given your objectives, experience, financial and operational resources, and other relevant circumstances. You should consult with such advisers as you deem necessary to assist you in making these determinations. The Royal Bank of Scotland plc, The Royal Bank of Scotland N.V or an affiliated entity ("RBS") will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser or owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on RBS for investment advice or recommendations of any sort. RBS makes no representations or warranties with respect to the information and disclaims all liability for any use you or your advisers make of the contents of this document. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not lawfully be disclaimed. RBS and its affiliates, connected companies, employees or clients may have an interest in financial instruments of the type described in this document and/or in related financial instruments. Such interest may include dealing in, trading, holding, or acting as market-makers in such instruments and may include providing banking, credit and other financial services to any company or issuer of securities or financial instruments referred to herein.

RBS is authorised and regulated in the UK by the Financial Services Authority, in Hong Kong by the Hong Kong Monetary Authority, in Singapore by the Monetary Authority of Singapore, in Japan by the Financial Services Agency of Japan, in Australia by the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority ABN 30 101 464 528 (AFS Licence No. 241114) and in the US, by the New York State Banking Department and the Federal Reserve Board. The financial instruments described in this document are made in compliance with an applicable exemption from the registration requirements of the US Securities Act of 1933. In the United States, securities activities are undertaken by RBS Securities Inc., which is a FINRA/SIPC member and subsidiary of The Royal Bank of Scotland Group plc.

The Royal Bank of Scotland plc. Registered in Scotland No. 90312. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB.

The Royal Bank of Scotland N.V., incorporated in the Netherlands with limited liability. Registered with the Chamber of Commerce in The Netherlands, No. 33002587.

The Royal Bank of Scotland plc is in certain jurisdictions an authorised agent of The Royal Bank of Scotland N.V. and The Royal Bank of Scotland N.V. is in certain jurisdictions an authorised agent of The Royal Bank of Scotland plc.

Gift this article