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Sometimes I wonder if people think about what they say… In a Reuters article titled British EU exit debate scaring off investment – Hermes funds I hit a line that made me go: say what?
Political rhetoric raising the possibility that Britain may leave the European Union could already be deterring foreign investment and harming London’s financial services industry, a top UK investor said (…) Another effect could be to weaken the allure of the City of London as a base for international financial systems with rival banking and investment hubs New York, Singapore and Zurich likely to benefit.
I was particularly struck by “and Zurich”. So Zurich, also in Europe but not in the EU, will benefit if London is not in the EU? Really?
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I suppose you could say ‘If you are going to do finance outside of the EU, you might as well be in Zurich, as London has none of the joys of Switzerland, compare the tax and regulatory regimes, the threat of retrospective taxation under Mr Osborne etc..‘.
Actually, not much in that article makes sense. Without fisking the entire thing I would simply note that neither New York nor Singapore is in the EU, either, so why would they necessarily benefit from the UK’s withdrawal from it? The comparison to Scottish independence is completely inapposite: people had serious doubts about Scotland’s ability to survive as an independent nation, but that’s certainly not the case with the UK itself.
If this article is an accurate description of Nusseibeh’s thinking I would have reservations about entrusting any money to him. He seems thoroughly confused about the true effects of QE.
Perry – as you will have noted, ALL the places named were outside the E.U.
Reuters are idiots – they mention New York, by the way – avoid that place like the plague over the next few years, Singapore, Zurich – but they do not mention places such as Paris or Frankfurt inside the E.U.
If the E.U. was a good idea, business enterprises would be flocking to Paris and so on.
Being outside the EU has nothing to do with that, Ed. And at least certain EU regs should be easier to dispose of.
Laird – why should investment advisers need reason? They have government backing the stock markets – so, for years, they have been able to make money.
I thought the insanity would stop years ago – but the governments of the world (including Switzerland) do not care how much harm they do to the capital structure – all they care about is inflating asset values, stocks and property, 20% up in the last year alone in London.
And that is what they have done, for year after year, regardless of the damage they are doing to the long term survival of our civilisation.
As the late Lord Keynes said “in the long run – we are all dead”, and he is dead.
So all that matters to government, and to people like Mr N. is the end of year results – the long term, the survival of our civilisation, does not matter to them at all.
There will be no reform, none. The madness will continue till it actually cracks up – as it may be doing in Japan.
Hence the rushed election – before everything falls apart.
Paul,
I would agree that it is difficult not to conclude that those running these shows know the consequences of what they are doing, but carry on regardless in the full knowledge that their short-run is all that matters.
I think the statement is only superficially illogical. If there are some benefits to doing financial business within the EU, London is currently reaping those benefits. It is a current competitive advantage that London has over New York, Singapore, Zurich etc. If London ceases to be in the EU, then it will lose that competitive advantage and some business that previously went to London because the “in the EU” advantage tipped the balance may now clear off to New York, Singapore or Zurich etc.
Of course there may also be costs and disadvantages to doing financial business inside the EU, which London is also currently reaping, and it may be that losing the disadvantages would be better for London than losing the advantages – I would tend to this view myself. But that is a complicated empirical question not a question of simple logic along the lines of “if London ceases to be in the EU it couldn’t lose business to non EU centres as a result.”
The relevant question to ask the EU puffer is – seeing as you’re aware that there are thriving financial centres outside the EU, what’s your reason for believing that London will lose more from leaving the EU than it will gain ?
Except that the EU is working tireless to erode away that competitive edge right now. A great many EU financial regulations are essentially regulation on London.
Of course, if the EU require EU domiciled investors to comply with EU regulations, and the UK is operating under a different regulatory regime, then that could perhaps lead to reduced business for London. Not a good reason to stay in though…
didn’t John Major give a speech recently, pointing out that if Britain left the EU, and if France continues down its’ path, then Berlin will be the effective ruler of the Eurozone? How many people would be comfortable with a German-run Europe?
It is unclear how having the UK within the EU would change that very much, other than being on the receiving end of more regulations to make competition between London and Frankfurt more ‘fair’ (i.e. favour Frankfurt)
Actually, as things stand now, i’d think that is preferable to the EU being dominated by the Paris-Berlin axis; and given the apparent Francophilia of the British ruling class, my guess is that the UK leaving would be good for the rest of us (except Parisians) because the UK exit would probably shift power from Paris to Berlin.
If the E.U. was a good idea, business enterprises would be flocking to Paris and so on.
Even if the EU was the best damned idea the world had ever seen and guaranteed to bring riches and wealth to everyone, business enterprises would not be flocking to Paris. For a conference or some secretary recruiting maybe, but not as a place to conduct business operations. I just spent half an hour queuing up to get my company Christmas present, along with half the office. Our building has over 3,000 employees and they decided to allocate 5 days for collection but only between 9:30 and 11:30am. So they need to process 300 people an hour, or one every 12 seconds. Have a guess how that’s working out? Jamming a corridor with employees waiting to collect presents is not the most productive use of human capital I have to say. And the present is a voucher, and to redeem it you need to complete a form and then go to an office and then…well, I don’t know. I gave up by then.
Welcome to France.
At one time, Britain had the basic idea of allying against the strongest land power in Europe, thus ensuring that nobody dominated Europe. What will replace that idea? Or will Eurotopia need a strong Naval power to balance against a rising Russian power?
Support for the E.U. (the idea that it can be “reformed”) is a good litmus test.
If a politician argues that the United Kingdom should stay in the E.U. (that the E.U. can be “reformed”) they expose that, at best, they have not a basic knowledge of the E.U. – its objective of “ever closer union” and its methods of lies and trickery.
Sadly the British government is committed to the illusion that the E.U. can be reformed.
Perhaps defeat in Rochester today will cause the government to rethink its policy regarding the E.U. – but I doubt it, I suspect this nation is the hands of people whose commitment to the E.U. is fanatical (beyond all evidence and rational argument).
However, I hope I am mistaken. And that the delusion that the E.U. can be “reformed” will be abandoned – the E.U. is an terrible thing, the United Kingdom (and all other members of the E.U.) should leave the E.U.
The E.U. should not exist.