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Will the UK be able to protect the City from Europe?


He still has to be rubber stamped by the European Parliament later this month, but former Luxembourg president Jean-Claude Juncker looks set to lead the European Commission for at least the next five years.

Much ink has been spilled over what this means for the UK’s efforts to reform the European Union. As a federalist, Juncker – like most of those running Europe – is unlikely to heed calls from Cameron and Co for protections for the City because doing so as a matter of policy, rather than on the odd legislative detail, would undermine the single market.

But what about influence over financial services rules?

While Cameron has lost out with the appointment of Juncker to Europe’s top job, 28 commissioners are still to be selected. Each will be responsible for drafting the rules for one policy area for scrutiny and amendment by the other two arms of the European Union: the Parliament and the Council.

Despite criticism of Cameron’s negotiation tactics – it was said he managed to change a Europe divided over Juncker into one united against the UK (and Hungary) – Juncker says he wants to address UK concerns. The best outcome for the City in the Commission would be for the UK to exploit this olive branch and aim for the most powerful economic post – internal market commissioner.

That post currently includes financial services. But even if the UK can secure it, Eurosceptic think-tank Open Europe says financial services may have to be carved out because many countries would oppose the UK having so much influence over the rules that apply to the City. After all, it was intent to protect the City which was behind Cameron blocking the fiscal pact in 2011 and that ‘veto’ was not well received.

European politics is a game of three halves. The Commission is important but so is the Parliament and the Council. If the UK looks unlikely to secure the financial services portfolio in the Commission it will certainly have less influence over the Parliament’s contribution.   

In the five years Liberal Democrat MEP Sharon Bowles chaired the European Parliament’s Economic and Monetary Affairs committee she steered 60 pieces of legislation through the national interest assault course that is Brussels.

She took the reins amid widespread scepticism over a British MEP having so much influence over financial services policy. Even though during her time Bowles won a reputation for giving fair hearings and achieving acceptable compromises, it is a near impossibility another Brit will replace her.

On top of that there are 11 more Ukip MEPs than before the European elections – and with their record of failing to engage in the Parliament they are more of a thorn in the side of Europe than a force in shaping legislation.

In terms of heavyweight UK influence over financial policy that leaves the Council, which represents member states. Britain will be one among 28 nations sitting around the table there and pushing for protections for the City every time they discuss financial services is not going to be a good look. If the UK manages to get the internal market job (even without financial services), arguing for carve outs to EU-wide rules could put the UK on a collision course with its own commissioner.

At a conference in London recently, Bowles said the last five years were about legislating for stability and the next five for growth. If the Conservatives remain in Government after the election they will be fighting on two fronts: reforming the union and protecting the City. And we all know the risks of fighting on two fronts in Europe.

Steve Tolley is political reporter at Money Marketing


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Bring on the Referendum. I won’t make the same mistake again. When we vote to leave the sense of release will be a bit like leaving the ERM on 16 September 1992.

  2. Ken

    You assume that the majority are like minded. Please remember that about 60% of eligible voters didn’t bother to cast a vote at the last European election. If only a relatively small proportion of these are pro Europe then the end result is not quite to cut and dried. We have yet to see the might of the advertising and propaganda that the big battalions will utilise. The majority of big business (apart perhaps from Financial Services) are very pro-European. As are our trading partners in and out of the EU (including the USA).

    From today’s papers it would seem that Dave is backpedalling like mad, by saying he can still deal with NC Junker.

    As ever -“It ain’t over till the fat lady sings” and my one vote will cancel out yours.
    What I find so very sad is that most people regard the EU as a matter of money. Especially this year. The 100th anniversary of WW1. It was the fact of 2,000 years of European wars culminating in the slaughter of the C20th that was the main motive power in trying to unite Europe and finally put an end to the slaughter. That we have taken in some countries who re really neither culturally, or ethnically truly European (although they are geographically) is another matter, and seems another lesson we haven’t learned from WW1.

  3. Julian Stevens 30th June 2014 at 7:21 pm

    The best outcome for the City would be for the UK to leave the EU. Even Cameron has hinted that we’re now a step closer to this possibility.

  4. If the people living in Scotland vote to leave UK I would be in favour of staying in Europe, but if the people currently living in Scotland vote to remain in the UK I would be in favour of leaving Europe.

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