EU Referendum


EU politics: a surfeit of FUD


23/01/2014



000a FT-022 bank.jpg

Yesterday was the day that we received news that Britain has lost a legal challenge to EU powers to ban short-selling in key test case. This, we were told, had major implication for the City of London's financial services.

The Government was seeking to have annulled Article 28 of Regulation (EU) No 236/2012 on "short selling and certain aspects of credit default swaps", giving power to the EU's Paris-based European Securities and Markets Authority in 2012, to intervene in national financial authorities in "exceptional circumstances", order to police financial markets. These powers were, our local government asserted, "unlawful" and an "institutional revolution".

The ECJ dismissed the UK's action and awarded cost against the government, arguing that Article 28 was designed to improve the conditions for the establishment and functioning of the internal market in the financial field. It must therefore stand.

What is particularly poignant about this, though, is that it came at the same time that the Financial Times was reporting that British banks had launched a "strong intervention" in the debate over the nation's membership of the European Union, calling for closer ties with Brussels and urging the government to raise its game in order to make the single market work.

This was an initiative from the British Bankers' Association, which sent a submission on the Treasury review of competences, arguing that the current balance of powers between Brussels and London was "broadly appropriate".

The timing could hardly have been bettered, demonstrating as it does where the power really belongs, but such events hardly seem to impinge on the ideologues who assert that everything in the euro-garden is rosy.

Amongst those is the Citigroup, which has also written to the Treasury, adding its concerns about costs to the UK economy if Britain was to leave "Europe". Citi asserts that, if the UK were to disengage significantly or completely from the single market the implications could be "dramatic".

The UK population would face a drop in living standards as a result of lower wages or a weaker pound so that the same export performance could be maintained within the EU. Jim Cowles, Citi's chief executive for Europe, the Middle East and Africa, tells the Financial Times of "mounting concern" among clients about their ability to continue using the UK as a regional hub if the country were to exit.

This, of course, is straw man territory, as no-one would sensibly argue for "significant", much less complete, disengagement from the single market.

Cowles's disingenuous remarks, therefore, make an interesting contrast with the views of the Airbus Group. UK Chief Executive Robin Southwell asserts that his company would never have achieved its success to date without a working and effective partnership of countries and companies within Europe.

"Any other economic model which seeks or offers to change the dynamic and advantageous characteristics which we presently enjoy - and believe are optimal to our delivering sustained growth and employment - would need to specifically address this quite proper challenge in a detailed and compelling manner," he then says.

Actually, those comments are fair enough, and that is precisely why we need to work up a "Brexit" plan, to ensure that valid commercial concerns are met.

In the FUD stakes, however, there is no dealing with this - Paul Polman, the Dutch chief executive of Unilever, blathering about the UK being better off staying inside the EU, rather "than kicking against the table" and voting to leave.

He says said the company could review its UK investment if Britain left the EU. "We will always look at things," he said, when asked whether Unilever could reduce its presence in the UK.

Unilever might employ 7,000 people in the UK and it is also a net exporter to the EU for its business, but this sort of ignorant polemic is entirely unconvincing. The man should mind his own business, instead of interfering with ours.

But what is interesting is the degree to which the europhiles are ramping up the FUD. One might think that these people are worried about the coming elections, as indeed is Mr Clegg, who is apparently going to argue that it is "vital" the UK stays in the EU when he addresses political and business leaders at the World Economic Forum in Davos.

Clegg is to say that membership is essential to cope with competition from countries such as China and India, apparently entirely unconscious of the irony that, while both Switzerland and Iceland have been able to sign trade deals with China, the EU has not been able to conclude deals with either China or India.

But then, the one thing we have learned about the europhiliac tendency is that they don't do irony. Perhaps, if they did, they couldn't be europhiles.