Germany’s ban on naked short-selling can only last “a very short time” as investors will find ways round it, former U.K. Finance Minister Nigel Lawson said.
“People will find ways of getting round it, move to other jurisdictions,” Lawson said in an interview with Bloomberg Television today. “It can only be workable for a very, very short time.”
Germany’s financial regulator BaFin yesterday issued a ban that took effect at midnight and lasts until March 31 next year in an effort to calm financial markets. Stocks around the world dropped, commodities fell and the euro traded near a four-year low as the move rattled investors. Europe’s top market regulator Eddy Wymeersch said today a Europe-wide ban was “doubtful.”
“It’s largely a political move,” said Lawson, who was Chancellor of the Exchequer under Conservative Prime Minister Margaret Thatcher from 1983 to 1989. “I don’t think it’s of any great significance.”
German Chancellor Angela Merkel’s government is increasing market regulation as lawmakers debate a bill authorizing the nation’s contribution to a 750 billion-euro ($913 billion) bailout to protect the euro. The short-selling ban, done independently of the European Union, came after the rescue package failed to stop the common European currency from weakening.
Lawson also said that he’s “certainly hopeful” on the ability of Britain’s new coalition government, led by Prime Minister David Cameron, to narrow the budget deficit. Lawson is member of Cameron’s Conservative party.
Both the Conservatives and the Liberal Democrats “agree that to get the deficit down, largely by public spending cuts, is the No.1 priority,” he said. “I would expect to see substantial reductions” in deficit projections in the planned emergency budget on June 22, Lawson added.