EU's Reding warns Brexit would isolate London's City

  

London's financial services centre would lose access to the wider European Union should Britain quit the bloc, the EU's justice chief said on Monday (17 February), warning that such a move would reduce its status to that of an offshore centre.

Viviane Reding's blunt comments come amid a heated debate in Britain over its future in the 28-country European Union and will reinforce fears in the City of London that a departure from the EU will hurt its position as a global financial capital.

"The City would most definitely lose its unhindered access to the (EU's) single market in the case of an exit," Reding, the EU's Justice Commissioner, told an audience at Cambridge University.

"EU member states would obviously have no interest in supporting what would then be an offshore financial centre competing with their own financial firms," she said in a speech.

Reding cautioned that Britain, were it to leave, would find itself in a similar situation to that of Norway, which applies the rules of the neighbouring European Union although it is not a member.

"It's difficult to see why the other member states would grant the UK unfettered access to their markets without requiring it to apply the EU's rules," she said in the text of her speech, citing research that found British households would be 3,000 pounds worse off annually outside the EU.

Prime Minister David Cameron has promised to renegotiate the terms of Britain's EU membership and hold an "in-out" referendum if re-elected in 2015, raising fears the world's sixth-largest economy could quit the club it joined in 1973.

Many in the City of London, which accounts for roughly one-tenth of the British economy and is rivalled globally only by New York, have been growing increasingly uncomfortable as this debate has unfolded.

While opponents of European integration say it has been imposed by out-of-touch bureaucrats, a growing number of banks, including Goldman Sachs and JPMorgan, have warned about the risks of a possible British exit, known as a 'Brexit'.

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.

Financial services contributed 65 billion pounds in tax in the last financial year to March 2013, or 12% of total government receipts.

"If the UK were to leave the EU, however, it would no longer be able to influence EU regulation," said Reding. "It would have to live with the rules decided on by the EU countries."

A possible referendum on EU membership is not the only factor causing uncertainty about Britain's future.

Scotland holds a referendum on independence in September and European Commission President José Manuel Barroso said on Sunday it would be "extremely difficult, if not impossible", for an independent Scotland to win approval from EU governments to become a member of the bloc.

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Comments

un europeen 's picture

I would say an Referendum for a real European Constitution for every member-states!

Those who are in will join the biggest economy & free trade !

If not everybody goes full back and closely end all the E.U. institutions because we don't need them to save the crisis if member-states committed and the nationals aren't doing nothing @ all !
Only Angela is happy but surely not if the E.U. goes federal because she won't it ! That's her interest!

What we need is equality and more democracy

And WHILST they are doin' nothing @ all , then preferably the choice is a referendum for a real 1 big economy or the "Everybody on it's own" !
That is what i suggest for!
What are we waitin ?

Joe Thorpe's picture

Does this stupid deluded woman think we are Switzerland or Greece or Ireland or Portugal? Does this blinkered woman think the UK doesnt have the means to hurt the EU economy a whole lot more than she can do to the UK economy? Just ask Angela before you speak dear woman or ask Francois Hollande's military chiefs. If this idiot wants to play hardball bring it on, we are the ones with the £60 billion trade deficit, when the German cars stop coming across here & the French cheese & Wine gets stopped at the border & Fiat & Peugeot have to apply duty to their exports they wont be long wishing this woman had retired before she opened her mouth. She should remember she would be wearing Swastika regalia if it wasnt for Great Britain! We can happily let the Russians move in they have never threatened us, neither did the Germans until we came to the rescue of Europe.

John's picture

The UK has yet to recover from 2008 economic levels. Obviously, something is not working and it is time for change. Hopefully the UK public take the necessary steps and put Great back into Great Britain.

tony a's picture

"The City would most definitely lose its unhindered access to the (EU's) single market in the case of an exit,"

The EU is small compared to the rest of the world in terms of financial services so the loss of Europe isn't the huge blow they are trying to make it out to be given and its share of world trade is falling fast. The reverse would also be true, The EU would lose its access to its largest source of finance ending it's dreams of being a world power overnight.

"EU member states would obviously have no interest in supporting what would then be an offshore financial centre competing with their own financial firms," she said in a speech.

True & Britain would also have no interest in continuing to throw billions upon endless billions in support of the Euro, The Cap & providing millions of European's jobs/welfare in the UK. This would also cause problems for manufacturers who have shifted millions of jobs from the UK across to the Continent to take advantage of lower wages while still having access to Britain, by far their largest market place.

"It's difficult to see why the other member states would grant the UK unfettered access to their markets"

Britain is the EU's largest trading partner for outgoing goods accounting for 22% of all European output. It runs a massive trade surplus with the EU so while the loss of trade with the EU would hurt the UK the loss of such huge amounts of trade would be economically devastating for the EU.

"If the UK were to leave the EU, however, it would no longer be able to influence EU regulation," said Reding. "It would have to live with the rules decided on by the EU countries."

Just how does Britain influence the EU anyway, It's the most under represented country in the EU power structure, it's 20% of the total population of the EU & one of the most powerful yet holds only 1% of the positions of power within its institutions. Britain's representation has fallen so dramatically in the last few years hell even Latvia has more people working in Brussels than Britain does. She also forgets to mention upon leaving Britain will have its own regulations that the EU would also have to follow if it wanted to sell its goods in the UK.

an european's picture

Great Joe ..your cocon words...amazing !
You're blatantly attaking every Pro-Europeans which doesn't feed your doggy interests like !
I don't think your proud waurds will help to recover but merely to downgrade it since as a lot of companies as BANKS already are preparing to leave the Union of the English Kingdoms in in case of a Lordexit!

Joe Thorpe's picture

We have no influence in the EU, we would have a lot more being outside like who can & who cant come to the UK for starters not to mention who can & cant travel through our waters & catch fish in them or cross our airspace. just 5% of UK GDP is exposed to the EU yet 100% of it is exposed to its daft rules & regulations. The EU has no defense without the UK so it can kiss goodbye to projecting its power beyond its own borders. The French cant get to Mali or the Central African Republic without British Transport planes or refuel its fighters without British Tankers, It cant even defend it's own airspace 24/7 as some air forces across Europe only work during business hours, its laughable. If the Reding woman thinks the people in the street are worried by her bluster she is much mistaken & will simply add fuel to the Nigel Farage bandwagon.

an european's picture

@ Joe

I have to agree with you

In fact the EU has basically no pan-european defense system but only a little EUBG Battlegroup which consist only laughable 1500 mens for high responsivness!The lack of an united or pan-european defense makes us fable even more when UK leave's Hence should not forget that MAYbe we will lose the english and then sprechen deutsch in the European Union if it comes to Angela , the Master of austerity, who don't want a united Europe for the well being of DE economy !
Either committing doin' it right or not ! 6 years with basically no growth and member-states leader STILL fighting & pussyfooting around the federal supervising of a bank bank union which isn't the core of the economic problem!
Maybe Member-states leaders (E.U. Council) will realize if UK brexit that they cannot add member-states in-definitively without tackling the CORE FIRST!

Charles's picture

And that's exactly why the UK should vote itself out of the EU and stop blocking financial regulation just for the sake of its City!

an european's picture

@ Charles
of course but just for the sake Charles, if there is still something financially left to regulate yourself the village of London...

an european's picture

@evad666
Ms Reding isn't judgin' but merely explains facts and consequences about the divorce results!

Barry Davies's picture

I thought she was doing an impersonation of King Canute a feeble attempt by a feeble failed politician to hold back the waves of euroscepticism growing throughout the eussr.

evad666's picture

It really is fascinating absolutely no coverage of the UKIP/LibDem debate and no comment on the public perception of the debate.