The Governor of the Bank of England has a key leadership role in the UK financial system, so it's important to understand his vision for Britain's new role in the wider world. Hence my interest in his strange speech on the "future of financial services".
In keeping with his political masters' devotion to nostalgic sense of entltlement he harks back to events just after the second world war and a commitment to an 'open world economy'. He points "with pride" to the fact that the Bank of England chairs two of the four main standard setting bodies of the international financial system – the Basel Committee for banks, IOSCO for markets, the IAIS for insurance, and the CPMI for payment and markets infrastructure. It is in this context that he launches a veiled attack on the EU for failing to grant equivalence to regulation in various UK financial sectors, despite the UK leaving the trade bloc. He suggests that Britain does not participate in forming global regulation to water it down, while his political masters intend exactly that. He points, ironically, to the City's "long history" of openness while failing to acknowledge that this was predicated on EU membership, and the protection that afforded London as a home for European financial markets, while only days later Amsterdam's share trading volumes exceeded London's. He whines about lack of equivalence findings from the EU, yet merely promises that "The UK’s financial markets and its financial system are therefore open for trade to all who will abide by our laws and act consistent with our public policy objectives." He then complains about the UK being a 'rule-taker'!
The very simple rejoinder to all this is that Britain is right to acknowledge that it must work with others to change the international rules before it can change its own. But it only has itself to blame for making that task harder by leaving the EU and losing influence over the shape of EU trade rules.
Britain joined what was then the European Economic Community in 1973 as the sick man of Europe. By the late 1960s, France, West Germany and Italy — the three founder members closest in size to the UK — produced more per person than it did and the gap grew larger every year. Between 1958, when the EEC was set up, and Britain’s entry in 1973, gross domestic product per head rose 95 per cent in these three countries compared with only 50 per cent in Britain.
After becoming an EEC member, Britain slowly began to catch up. Gross domestic product per person has grown faster than Italy, Germany and France in the more than 40 years since. By 2013, Britain became more prosperous than the average of the three other large European economies for the first time since 1965.
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| Source: Institute for Fiscal Studies |
As the UK will no longer be a Member State, there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States. The laws of those states are similar but may differ in some areas to UK law both as respective laws evolve over time as well as due to differing levels of harmonisation between Member States in some areas. UK consumers will also no longer be able to use the UK courts effectively to seek redress from EU based traders, and if a UK court does make a judgement [er, judgment for court decisions], the enforcement of that judgement (sic) will be more difficult as we will no longer be part of the EU. In addition, there will no longer be reciprocal obligations on the UK or EU Member States to investigate breaches of consumer laws or take forward enforcement actions... UK consumers would need to seek redress through the courts of that state rather than UK courts.
