A former LibDem minister, Jeremy Browne, has given an interview following visits to the EU capitals to discuss financial services as an envoy of The City (HERE) and has discovered that France is trying to steal banking and financial business from us. I am surprised he is shocked. What did he think was going to happen?
Imagine you had a partnership with a trusted friend. You decide you want to strike out on your own, dissolving the partnership. There are now two businesses. They are competitors. The first order you pursue is lost and you find your former partner has undercut your price to secure business you thought was yours.
Were you wrong to go it alone? Not necessarily, but you were wrong to think your old partner would not see you as a direct threat to him and act accordingly. Business is a dog eat dog thing, almost a zero sum game. Two companies will not generate twice the business in any given area or sector. Neither business can be sure future orders will be shared equally. Every new order strengthens you and weakens your competitor. Pretty soon you are not on speaking terms and begin cutting your prices to win orders.
This is what is happening with the UK and France. The City was in the dominant position and therefore has most to lose. France is a founding member of the world's largest and richest trading bloc. Did anyone seriously think they will allow us to continue to benefit from what they have built while we pay nothing and try to create a global rival to them? Come on!
Meanwhile, InFacts (HERE) are reporting that the European Securities and Markets Authority (ESMA), Europe’s top financial services regulator, issued three “opinions” on specific sectors – investment firms, asset managers and secondary markets. It made clear that “letter-box” relocations by London-based companies will not be acceptable to national regulators inside the EU confirming the general rule for all financial markets laid down by the ESMA in May, and backed up by Danièle Nouy, chair of the supervisory board of the European Central Bank, in June. “We will not accept shell companies in the euro area,” she said. London-based banks wanting to operate in the euro area “must be ‘real’ banks”.
Let us see how dominant London is in reality.
