Britain’s clout in the European Union is weakening, just when plans for a capital markets union present a “golden opportunity” for London’s financial sector, UK lawmakers said on Monday (2 February).
The House of Lords report described European efforts to strengthen banking rules and avoid a repeat of the 2007-09 financial crisis as “admirable”.
It said the bulk of EU proposals were “necessary and proportionate” with some exceptions, like the bank bonus rules and the “ghastly” financial transaction tax.
The EU is planning a capital markets union to boost scope for companies to raise funds. With London the bloc’s biggest securities market, the report said it was vital Britain retained direct involvement in decisions that affect one of its most important economic sectors.
“We urge the government to do all it can to restore the influence the UK once had in Brussels, and to keep our place at the front and centre of the debate,” said the Chairman of the committee, Lord Harrison (Labour). “The City of London is a prised asset not only for the UK but for the EU as a whole. Yet the UK, for all its expertise, risks being side-lined.”
Supporters of EU membership fear that Prime Minister David Cameron’s promise of a referendum on the issue if he wins a May general election is eroding Britain’s influence. Opponents say membership has led to excessive immigration and bureaucracy.
Mark Boleat, policy chairman at the City of London, the municipal authority for London’s “square mile” financial district, said Britain should be playing a “full and active” part in shaping EU rules.
“The capital markets union presents a golden opportunity for the UK … It is therefore imperative that the government ensures that the UK is at the front and centre of the debate,” the report said.
The report also said that EU securities, banking and insurance watchdogs lack authority, funding, and independence from the European Commission to do their job properly.
“The powers and authority of these agencies need to be enhanced,” it said, a view that could raise hackles in a Britain leery of seeing any more national power migrating to Brussels.
The Bank of England said last week that no institutional changes were needed to implement a capital markets union.