03/02/2015
Reuters has
an article on
the report of the House of Lords EU Economic and Financial Affairs Sub-Committee. That Committee has been delivering its views on "the post-crisis EU financial regulatory framework", and the legend we are supposed to believe is that 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.
Efforts by Europe to strengthen banking rules to avoid a repeat of the 2007-09 financial crisis are "admirable", the Committee said, but it criticised the costing of the impact of the new laws and noted other flaws, saying Britain needed to retain direct involvement in decisions that affect one of its most important economic sectors.
It does seem, though, that this largely Europhile committee is misleading itself, the media and the public at large â effectively ignoring
the evidence placed before it.
For instance, there was Professor Simon Gleeson who told us that, if you look at the totality of the European response to the crisis, with the exception of banking union the Commission proudly announced that it had 40 different items of legislation. Of those, all of them, said Gleeson, with the exception of one and the partial exception of another, follow policies that were already being implemented in the UK.
Had Europe not existed, he continued, every single one of those directives would have been implemented here for exactly the same reasons that they were implemented at the European level, because they were part of a globally considered response to the crisis.
The Committee itself asked our witnesses whether the main elements of the EU financial sector regulatory framework would have been enacted in the UK irrespective of its membership of the EU. Sharon Bowles, Lib-Dem MEP described as "rubbish" the "all-pervading notion that in the absence of EU regulation there would be no regulation" in the UK.
In her view, a UK-only regulatory framework would have been more stringent, as the UK Government's push for tighter regulation over the CRD IV/CRR negotiations demonstrated. She said that the UK had "blindly followed" the Basel agenda, and pointed out that the UK had often led discussions at international level, for instance with regard to bank recovery and resolution.
Andrea Leadsom MP, Economic Secretary to the Treasury, stressed that the UK had played a significant leadership role in the development of international standards. Consequently many of the reforms would have been enacted even if the UK had not been in the EU.
Prof Gleeson said that, of the 40-plus pieces of legislation, with one or two exceptions: "Had Europe not existed, every single one of those directives would have been implemented here for exactly the same reasons that they were implemented at the European level, because they were part of a globally considered response to the crisis".
He pointed out that at FSB/G20 level most of the policy input came either from the UK or the US, so "we are making policy for ourselves through a very long and devious route".
Professor Kern Alexander, University of Zurich, noted that the UK was an important participant in FSB discussions on international standard-setting, and in the Basel III discussions on capital requirements. In terms of EU legislation, the UK had spearheaded both the Bank Recovery and Resolution Directive and the deposit guarantee scheme revisions.
In other words, when it comes to financial regulation and the UK, the EU is an irrelevance. The necessary regulation is made at an international level and the UK would have adopted much the same regulation in or out of the EU.
As the Committee was told, Mark Carney is Chairman of the Financial Stability Board, so the UK will always have its seat on the Basel Committee, the FSB and things like that. As a major player in financial services, it will always be highly influential, and does not need the EU as a power broker.
Cutting through the FUD, the UK will not suffer from a departure from the EU. It is a global power in its own right. It sets the agenda and the EU follows.
