Lord Mayor of London: ‘The single market is what it is all about’

Europe needs to focus on the single market and increasing its global competitiveness, according to Alan Yarrow, the Lord Mayor of London. He sat down with EURACTIV UK’s, Mark Briggs to discuss the City’s relationship with the EU, and what he would say to Angela Merkel.

Alan Yarrow is the 678th Lord Mayor of London. Serving a single year term, he acts as an Ambassador for the City of London Corporation, both at home and abroad.

You previously said you aren’t in favour of the UK holding a referendum on EU membership. Why?

The problem with referenda is that they are more emotional than analytical. We in the City like to be more technocratic about things. We like to have a good economic narrative along with analysis rather than having emotion over taking everything.

There is a strong majority of people within the City of London who would like us to stay within a reformed Europe. Why? Because there is a very strong argument that we have the largest financial sector in the world and the financial centre for Europe. There are 500 million people in Europe, and we want to be able to offer them financial services without barriers and without tariffs.

A Brexit could put that at risk.

What reforms would you like to see in the operation of the EU?

I would like to see labour market reforms with more flexibility. In volatile economies, you’ve got be able to put your foot down and accelerate, and be able to break. The single market has to be fully developed, barriers need to come down, insurance has to come down. We should stop talking about putting barriers on trade such as the financial transaction tax. We’ve got to have a greater consideration of the competitive world.

We are going to have to compete with some very fast growing economies with some very bright people. We’re going to feel the pressure increasingly over the next 10-20 years, and of course there is the ageing problem. The demographics of Europe are not clever. The fertility rate in Europe doesn’t facilitate a risk loving, entrepreneurial attitude to life.

What about the subject of immigration?

We like good quality, talented immigration. We have survived because we have an open attitude to bringing in people from around the world to do jobs we can’t do.

There is a very clear desire from the City to make people realise we have benefited from the right sort of immigration in this country enormously and we’d be crackers to stop that from happening.

We’ve had a problem in this country with STEM subjects (science, technology, engineering and maths). We’ve benefited hugely from being able bring people in to fill that skills gap.

Are you worried about eurozone members caucusing the single market?

The single market is the whole point of it. If you have caucusing, it breaks it apart. I think you need one set of rules for all 500 million people, but it doesn’t keep me up at night.

Are there changes to the single market you would like to see?

Insurance is still very regional and parochial. Some markets have got greater attention than others, but insurance is going to be very important. Spreading risk around people and getting a better average expectation is a good thing today.

Nearly every single economy has obligations to be people who have been saving for 30-40 years. If you can find some sort of utilities earning for these people, you can get infrastructure built. Insurance is long term money. It can fund infrastructure, and infrastructure can help the economy.

You are going to Luxembourg next week ahead of the Luxembourgish holding the rotating presidency of the European Council. What will you be saying to them?

I’ll be listening. Our reputation in Europe isn’t that good. People think we talk too much and don’t listen.

We need to be persuasive in getting our point across, bearing in mind this is a democracy. This isn’t done by a lone voice on the other side of the channel shouting at the French. That is why we are working with French business and other partners to get better understood.

What are your views on TTIP?

TTIP is a very important agreement. It is critically important we try and include financial services.

We are very keen on TTIP, but the deliverability is my concern. I don’t get the impression there is a lot of push coming from the States to try and get it sorted.

We’ve got to work hard to get tariffs down. We’ve been very clear since the days of George III we don’t want friction impeding trade, and TTIP can help.

What do you think are the pros and cons of current plans for a Europe-wide Capital Markets Union?

I think the evidence is that if you don’t have a mature corporate bond/private placement market, you increase reliance on banks. I do think that because Europe only has a relatively immature alternative market outside of banks, it meant that when the banks had to start building their capital bases, it detracted from making revenue available to business. Sophisticated capital markets put less pressure on the banks.

There are lots of concerns. We’ve got to have complete and utter access to all capital markets in Europe. You couldn’t possibly have a eurozone clearing system that has to be cleared in Europe.

I think the ruling prohibiting that on the grounds of competencies showed that in Europe they are objective and sensible.

>> Read: UK wins right to continue euro clearing

What is your opinion on the amount of red tape and the number of regulations from Brussels?

We have to tendency to put things into law more thoroughly than our European friends. People see this as an impediment to business because other nations don’t do it.

But, I don’t think we have enough real understanding of quite a lot of things from Brussels. We’ve got to get closer to where regulations are written. We’re [UK] suffering at the moment from a lack of good people in Europe at the moment.

Are there areas you think are under-regulated?

I’m worried about crowd funding. It looks like an accident waiting to happen. I want to know more about it.

Cybercrime is also interesting. If you lose your bike the police come round, if you lose thousands in a cyber fraud, where do you go?

The European Council is meeting this weekend. If you could give them a message, what would it be?

You’ve made some interesting changes but there is an awful lot more to go for.

You’re getting some things right. You’ve got QE, you’ve let the euro drop against the dollar, you’ve realised you can’t do this on your own and you need the rest of the world, and you’ve begun to realise how uncompetitive you’d become.

But it has taken too long.

The next thing I would do is have a quiet word with Angela Merkel and say ‘running a trade surplus of 8% of GDP isn’t healthy, for anybody.’ They’ve got to spread it out. 

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