London Finance Hub Threatened by EU Exit, Sweden’s Borg SaysSvenja O’Donnell and Kevin Crowley
Swedish Finance Minister Anders Borg said he is “deeply worried” about Britain’s position in the European Union and that a U.K. exit could threaten London’s status as the world’s top financial center.
“It would be very difficult to see London remain a financial center” if the U.K. quit the EU, Borg said in London yesterday. “If you are not participating in discussions, it’s difficult to be believable.”
Prime Minister David Cameron will tomorrow deliver his most important speech to date on Britain’s position in the 27-nation bloc, as he faces increasing pressure from some of his Conservative party for a referendum on whether the U.K. should remain in the union. Deputy Prime Minister Nick Clegg said the move could damage jobs and growth, while opposition leader Ed Miliband said Cameron was “sleepwalking us towards the exit door” earlier this week.
“We are deeply worried about how the debate on the EU has shifted in the U.K,” Borg said. “The Brits must be at the table.”
London ranked number one ahead of New York and Hong Kong in a September study by consultancy Z/Yen Group Ltd. looking at the world’s most competitive financial centers. It is the world’s biggest center for foreign-exchange trading, cross-border bank lending and has more international firms than any other financial center, according to TheCityUK, a London-based bank lobby group.
“London’s position as Europe’s financial capital is crucial to sustaining jobs and growth, not just in the U.K. but across the continent,” said Mark Boleat, policy chairman at the City of London Corp. “Uncertainty over this relationship with Europe risks making the U.K. less attractive as an international center across many industries -- not just financial and professional services.”
Swedish Prime Minister Fredrik Reinfeldt is one of Cameron’s closest allies within the EU and the two spoke about the U.K. leader’s speech on Europe on Jan. 14.
Cameron said this week while he’s in favor of remaining in the EU, he’s “not happy” with aspects of the relationship and wants to claw back as yet unspecified powers.
Labour Party leader Miliband said that Cameron’s strategy is “incredibly dangerous.” Business Secretary Vince Cable, whose Liberal Democrat party governs with Cameron’s Conservatives, described talk of a referendum as “deeply unhelpful” at a time when the government is trying to persuade companies to invest in the U.K.
The U.S. has also weighed in, with Philip Gordon, assistant secretary of state for European Affairs in President Barack Obama’s administration, warning against a referendum, saying the U.K. staying in the EU is important to U.S. interests.
“We need the U.K. at the table, taking part,” Borg said at a separate event at the London School of Economics. “The key asset that the U.K. is providing for Sweden and for Europe is the fact that London is our leading financial center, but the financial sector can never be separated from the political structures. I cannot see how it can be sustainable that London is the financial center of Europe and at the same time stepping out of political discussion.”
Commenting on the euro-area economy, Borg said people shouldn’t be “overly optimistic about 2013.”
“It would be dangerous to say the crisis is over,” he said. “We may come back to a situation where uncertainties about some member countries come back to the forefront of the market.”