Bloomberg News

Cameron Says London Is Under ’Constant Attack’ From Brussels

October 28, 2011

(Updates with Cameron comments starting in seventh paragraph.)

Oct. 28 (Bloomberg) -- Prime Minister David Cameron said London’s financial center is under “constant attack” from European Union bureaucrats and he’ll seek to prevent closer integration by countries using the euro from hurting the City.

This week’s agreement to bolster the euro area’s defenses against the sovereign debt crisis will lead to “more meetings alone” and the prospect of “caucusing” among the 17 nations that share the single currency, he said.

That would increase the chances that decisions taken without Britain, which isn’t a member of the euro group, may damage London’s standing as the continent’s leading financial center and benefit Paris or Frankfurt, according to Cameron.

“London is the center of financial services in Europe,” the prime minister told reporters as he traveled to Perth, Australia, where he met Commonwealth leaders today. “It’s under constant attack through Brussels directives. It’s an area of concern, it’s a key national interest that we need to defend.”

British politicians fear EU efforts to control financial markets following the financial crisis that began in 2007 will do little to reduce risk and damage the industry. The European Commission has adopted German calls for a financial-transactions tax across the 27-nation European Union and has proposed plans that could hurt derivatives trading in London.

Single Market

“It is very important that the institutions of the 27 are properly looked after and that the commission does its job as the guardian of the 27,” Cameron said. “As the 27, we need to make sure that the single market is adequately looked after.”

Cameron later told BBC television that while some regulation from the EU was needed, some is “badly drafted, badly formed” and needs changing.

“And of course, all countries in Europe pursue their national interest,” Cameron said. “Would the French and the Germans like a larger share of financial services in Paris and Frankfurt? Of course they would. Well, I want to make sure we keep them in London. That’s why we fight very, very hard for our national interest.”

Four days ago, Cameron overcame the largest ever rebellion in his Conservative Party over the European Union, when more than a quarter of his lawmakers voted in favor of a referendum on British membership of the bloc.

Cameron sought to calm the anger of the rebels by saying he has already prevented the EU from adopting further powers since he became prime minister last year and that he will “make the most” of any future treaty changes to repatriate powers from the bloc.

‘Madness’

London Mayor Boris Johnson, a Conservative, wrote to the president of the commission, Manuel Barroso, urging him to halt the transaction tax, according to a statement from the mayor’s office today.

“At a time when many EU member economies are struggling, some on their knees, it would be madness to weigh them down with this new millstone,” Johnson wrote. “Apart from weakening its financial sectors and London’s in particular, it will hamper the ability of businesses across Europe to compete in the global market and have serious implications for EU jobs.”

Chancellor of the Exchequer George Osborne told lawmakers in London yesterday the U.K. would oppose a transaction tax that wasn’t agreed globally.

‘Long Time’

“Britain will not accept a financial-transaction tax at an EU-27 level while other places in the world don’t have one,” the chancellor said. “As that’s a long time off, if ever, we will be waiting a long time for a European transaction tax.”

Osborne won concessions from other EU finance ministers this month on derivatives legislation. Ministers agreed to restore a provision that would allow “open access” to clearinghouses for all trades, which had been removed from earlier drafts.

European leaders persuaded bondholders this week to take 50 percent losses on Greek debt and boosted the firepower of their rescue fund to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the financial crisis.

--With assistance from Robert Hutton in London. Editors: Eddie Buckle, Andrew Atkinson

To contact the reporter on this story: Gonzalo Vina in Perth, Australia at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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