U.K. Banks Urge Government to Counter EU Influence Threat
British banks have urged the government to stave off risks to its influence in European Union financial-services rule-making amid deeper integration of the euro area.
The U.K., whose opposition to EU banker-bonus curbs was rebuffed last year, faces challenges including new voting rules that give the euro area an automatic majority in decision-making, according to a report by the British Bankers’ Association obtained by Bloomberg News.
“Understandable moves toward stronger euro-zone governance may make it more difficult for the U.K. financial sector to play a full role” in the EU single market, according to the BBA, which represents U.K. lenders and other banks active in the country. “Euro-zone caucusing, outside the EU-28 format, on matters that impact directly the single financial market could, even unwittingly, damage its integrity.”
U.K. Prime Minister David Cameron has been forced on to the back foot by other EU leaders is his opposition to the appointment of former Luxembourg Prime Minister Jean-Claude Juncker as the next president of the European Commission, the EU’s executive arm. The clash is the latest in a series of battles that include Cameron’s 2011 veto of a planned fiscal treaty after he failed to secure powers to block future EU financial regulations.
The U.K. has also undertaken a series of legal challenges against EU measures adopted in response to the financial crisis, ranging from centralized powers to ban short selling to a ban on bonuses worth more than twice fixed pay and a proposed financial-transaction tax.
While “the euro zone will need to develop the necessary working structures to deal with internal euro-zone issues,” this shouldn’t be done in a way that creates “divisions in single-market decision-making,” according to a cover letter from Anthony Browne, the BBA’s chief executive officer. The report has been sent to the U.K. government and political parties.
New double-majority voting rules that apply from Nov. 1 will mean that the 18 euro-area countries will be able to muster a “clear majority” when it comes to decisions on EU laws, according to the report.
The appointment of a full-time president of the Eurogroup, the name given to meetings of euro-area finance ministers, is a “likely political outcome” once the term of the current president, Dutch Finance Minister Jeroen Dijsselbloem, expires next year, according to the report.
“The full-time president will be a significant step and should either be avoided or guarantees put in place for mitigating its impact,” the BBA said.
Other challenges for the U.K. include the departure of key British members of the European Parliament’s Economic and Monetary Affairs Committee, and a potential relocation of responsibility for financial services rule-making within the commission.
A spokesman for the BBA declined to comment on the report.
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