EU exit is bad for business, says UK lobby group

London dominates the $5-trillion-a-day foreign exchange market, trading twice as many dollars as the United States and more than twice as many euros as the entire euro zone, according to TheCityUK study.

A British exit from the European Union could wreck London's position as the only financial centre to rival New York and isolate the country's economy, research ordered by a lobby group for banks and money managers showed.

Prime Minister David Cameron has promised to renegotiate the terms of Britain's EU membership and hold an "in-out" referendum by the end of 2017 if his Conservatives win a 2015 national election.

But many of the most powerful banks, insurers and money managers in the City of London are increasingly concerned that Cameron's gamble could allow the country's $2.5 trillion economy, the world's sixth largest, to slip out of the EU.

TheCityUK, whose members include asset managers, banks, insurance and accountancy firms, warned that Britain outside the EU would be shorn of influence, less attractive to investors and vulnerable to regulations over which London had no influence.

"This is yet more powerful evidence that the UK pulling out of the EU is the very last thing our country needs. It will kill our hard earned recovery ... We will be left isolated in the margins and our future prosperity will be limited for generations," Chief Secretary to the Treasury Danny Alexander will say in a speech on Monday, according to advance extracts.

"This rigorous and in depth work clearly shows that leaving the EU will lead to higher prices, higher unemployment, lower growth and lower real wages," Alexander, a member of pro-EU junior coalition party the Liberal Democrats, will say.

London dominates the $5-trillion-a-day foreign exchange market, trading twice as many dollars as the United States and more than twice as many euros as the entire euro zone, according to the lobby group.

"Continued EU membership is essential to this country's economic wellbeing," said Gerry Grimstone, Chairman of TheCityUK group. "Our research clearly shows that leaving the EU would seriously damage economic growth and jobs in the UK."

A growing number of banks, including Goldman Sachs, Citi and JPMorgan, have warned a "Brexit" could hurt London's position.

Opponents of the EU say Britain would do better to trade with the world from outside the bloc. Opinion polls show voters are split on the issue, with 40 percent wanting to remain in the EU and about the same proportion saying they would opt to leave.

Law firm Clifford Chance said its research showed that under five possible scenarios for Britain leaving the European Union, the financial services sector - which accounts for about a 10th of Brtain's gross domestic product - would be harmed.

"The success of the UK financial services industry is to a large extent built on EU Internal Market legislation. To abandon this for some untried, unknown and unpredictable alternative would carry very significant risks," said Malcolm Sweeting, a senior partner of Clifford Chance.

"The UK is a powerful player in the EU and should retain the capacity to push for reform as a member," he said.

While Cameron has pledged to hold a referendum if he wins in 2015, the opposition Labour Party has said any Labour government would be unlikely to hold such a vote this decade.

  • May 2015: UK to hold general election
  • 2017: EU membership referendum proposed by David Cameron


Mike Parr's picture

The article has a number of weaknesses - which play into the hands of the Kippers (who have no policies apart from the parrot call "UK leaves EU).

London is not the UK, the UK is not London.
Most UK citizens/subjects/serfs (delete as appropriate) do not live in London & have exactly zero benefit from the existence of London.
The London-based finance industry was a key player in the evisceration of UK manufacturing (once upon a time children a major employer)
The UK has a minimum wage but this requires a government subsidy to top it up to a level that allows UK citizens to live(& work) - 30%+ of working people need gov subsidies.
The above marginal situation has led to significant numbers of people from other parts of the EU edging UK citizens out of jobs & in turn leading to the anomalous situation of non-UK citizens paying UK taxes which then go to non-working UK citizens who could work were the minimum wage = to the cost of living.
None of the UK parties want to address this - the Kippers come out with simplistic garbage (fit for the simpletons that support them).

The banks & various finance institutions quoted in the article are serial UK tax dodgers with more "form" in this area than east end criminals. They & their staff contribute exactly zero to the UK economy (apart from distorting it with respect to, for example, housing costs in the South East).

As far as the statement by Alexander "exit will kill our hard earned recovery" this is a fairly straightforward lie from a member of a political party that is regarded by significant parts of the UK populace (e.g. students) as the party for and populated by congenital liars.

Given the above, the only surprising thing is that people are surprised that the Kipper party is "popular" - even if their message could only be taken seriously by morons and the criminally insane.

an european's picture

I already posted about the Bronx city of london and the City of Europe but who cares !
Europe at least the Eurozone should go further strenghtening regardless beyond illogic offends of f some irredutable nazionalism !
And therefore the Unity should get even more stronger than to be maltraited of camouflated british as well far right hack cross!
Anyway , can't blame Northamerica of their 50 United States !
Can't blame the roman republic!
Must blame Europe not to be it ! Can blame 2 nationproudly wars already behind us and the british who thinks weren't nearly bombed like europe's cities! !

Don't care anymore if ukip's crapsters whatever as even belying it's own people leaving Kingdom's kipped economy . For sure !
People believe what they want to hear!So it must go to promise lies to them and Ukip is doing very well !

El Pluribus Unum

Gerry's picture

While I agree that the UK is a powerful player in the EU I do not agree that it's capacity to reform has been used in any good manner. Additionally, the financial services sector that's discussed here is home to the greatest bunch of swindlers, thieves and white collar crime that the world has ever seen. Who is going to believe J P Morgan, Citi and Goldman Sachs when speaking with a united voice? God knows what their true intentions are this time around. Just frightening.

evad666's picture

Meanwhile Reding urges UK citizens to make informed decision on EU membership while Mastricht debate is unannounced in UK and UK voters believe ET is easier to communicate with than their MEP and the EU.