BRITAIN will rue the day that it passed over control of financial market regulation to the EU. As if a taster of what UK market participants may soon be about to suffer look no further today than gloating and distasteful remarks from French President Nicolas Sarkozy following the appointment of French Farm Minister, Michel Barnier as EU Internal Market Commissioner. Showing what may best be described as complete ignorance let alone absolute disregard for the real and underlying ‘devious’ reasons behind Barnier’s appointment M. Sarkozy’s unfortunate, arrogant and hardly diplomatic remarks may be seen as tantamount to a view that demands the world regards this French EU appointment victory as one that ensures the European economic model, warts and all, will permanently usurp what we have long regarded as the hugely successful Anglo-American model. Well, as far as I am concerned M. Sarkozy, you can tell that one to the Marines!
Despite failures and some obvious misgivings over the damage that has occurred over the past two years and despite most of us being ready and willing to receive strengthened regulation of the system to ensure that never again does it implode to such an extent as far as most global investors and traders are concerned there is absolutely nothing wrong with the Anglo-American model. I share that view. Meanwhile, the appointment of M. Barnier to what we may, tongue in cheek, ascribe as the new ‘chief of European regulatory police’ job was, according to M. Sarkozy, “nothing to do with the excesses of financial capitalism”. Really…..and neither I suppose was it anything to do with ensuring absolute free and open competition of European financial markets either! Indeed, not only will virtual continental wide regulation fail to open doors for EU nations to win more business from Asia, North America and other emerging markets I am in little doubt that what it will do is to steer far more business toward North America, the Middle East and will force Asian markets into developing their own financial markets further meaning nations such as China and Japan benefitting too.
There is little argument about it in my mind and Messrs Darling and Brown know it full well too – this whole very nasty European regulatory process is designed to permanently eradicate hard won competitive advantage that UK financial markets have enjoyed over very many years. What a great pity then that the UK electorate either don’t appear to understand or, even if they do, appear to care much at the prospect of losing the great strength that we currently still have in global financial markets. Spoon fed on an uneven and incorrect view that it is banks and financial markets alone that are responsible for the vast round of failure rather than also including failure of governments over the years to ensure that regulatory systems were operated soundly and by those best placed to ensure that bubbles could be avoided it seems to me that the UK electorate has absolutely no idea that over regulation or taking any part of it away from direct national control may well seriously damage not only UK economic recovery but could actually lead to years of further economic decline.
Such negative views will no doubt haunt those that work in the City of London and the other great confines in which UK based financial markets are centred. Soon it really will be too late to turn the clock back and once buried in the EU pit you can bet that as taxpayers it will also cost all of us a lot more money to operate than a soundly based national system. Of course, the plan is that UK regulatory regimes are retained and whilst this must be right it is torrid to even think about the massive additional burden of bureaurocracy and cost that will be added by Europe wide regulation. Such concerns really should haunt senior politicians of both main political parties – Labour and Tory alike as it is they that in future may have the blood on their hands if as I suspect that two or three years from now many thousands of British based financial market jobs are swept away.
Why is it then that hapless political leaders of both main UK parties are seemingly happy to acquiesce to the handing over of virtually all financial market regulation to the European Union? In the case of Labour it is surely a simple late play for votes ahead of the 2010 general election on the assumption that the plight of the party having already sunk to such lows that there may only be a very few more votes to be lost. It may also be slightly long term thinking on the basis that if the Tories do win next year the damage that a move such as this could do if financial companies abort the UK could well mean that six years from now the country could be in an even deeper mess. Chancellor Darling can, as he has attempted to do today in an article placed in The Times, play at being the good boy warning M. Sarkozy against meddling with the City of London. But it is already far too late for that thanks to Prime Minister Brown and in any case, we well know that Mr. Darling speaks with forked tongue! For instance, on one hand Darling says that Europe is not competing against itself but moreover, striving for global excellence. Even so, the bottom line is surely that countries such as France and Germany are simply looking to steal massive UK financial market competitive advantage for themselves. Darling also says that the FSA must be responsible for supervising individual companies in Britain and yet at the same time he says that the EU needs a single rulebook for financial regulation covering banks, insurance and securities plus a mechanism for national regulatory supervisors to co-operate in its implementation. Frankly as all markets are different that argument doesn’t stack up. Darling says also that tougher regulation is in everyone’s interests. Maybe so but there is an equal case to ensure that what is needed is strengthened regulation as opposed to far more of it and in any event ensuring that we don’t end up throwing the baby out with the bathwater turning it into overregulation. Sure, I agree that changes are needed to regulation and that it does need to be strengthened. But what I will not accept is that if we (the UK) are to survive and compete in what is and always will be a global market and one in which we happen to still command considerable respect that we should veer that far away from the Anglo-American model. Mr. Darling and his equally discredited boss at Number Ten should remember the old adage – when in a hole stop digging! Appalled as I am, as to reasons why in the blue Tory corner in which we find Messrs Cameron and Osborne doing little more than cowering what to do whilst somehow playing into the hands of the more formal government view that British interests really are best served handing over control of financial market regulation to the EU I am quite frankly lost for words!
Perhaps the best way to treat both Sarkozy and Darling remarks today together with how best to approach the appointment of M. Barnier as EU Internal Market Commissioner would be to see them as the epitaph for yet another once great British success story. As we speak, it is not too late to pull back and for government and indeed, Tory opposition to come out fighting for Britain. Neither will do that though despite a handful of Euro-sceptics that have for months been attempting to expose the real writing on the wall. We may well ask also why it is that those who this European regulatory stampede will eventually affect say all too little. Are they weak willed –are they walking around with their eyes shut imagining for one moment that all will be well and that US and Asian markets alongside the French and Germans won’t be champing at the bit to take advantage? Many of course are in no position to stand up and be counted right now due to the failure of various governments to ensure adequate regulation or that the policing of it was in the right hands. So be it and all I can say to them is get ready to start looking over your shoulder!
