This 'argument by anecdote' is one that we've heard so many times before, and the last few days has seen a number of exponents of it.
Monday's FT reported that:
"while others within the banking community and beyond said the decision risked destroying the country’s position as Europe’s pre-eminent financial centre."The Observer added:
"It was hard to find many business voices supporting the decision this weekend"Michel Barnier, the European Commission for the Internal Market and Services had a piece in the Telegraph today, in which he argued that:
"It seems clear to me that the City's interest is in a truly single European market, not a fragmented patchwork."Hosting a breakfast for Nick Clegg this morning, Philip Souta, BNE's genial Director, said he believed Cameron "did the wrong thing in using the veto" and BNE chairman Roland Rudd chimed in:
"Business clearly wants a deepening and widening of the single market and that is what our message is in terms of wanting to see greater reforms. We are not defending the status quo, we are trying to see a changed and reformed Europe."Yes, of course we're all in favour of trade and growth, but let's think a bit deeper about this. Cameron's efforts last week, whatever you make of the tactics and if he asked for the right thing, were an attempt to achieve reform in Europe, through more local ownership of supervision and capital rules for banks, for example.
So surely, what's interesting is what business really thinks about the basic aims. And what does it actually think about the single market? Well, you're in luck, because this morning we published a new ComRes poll designed to inject some substance into a debate that has so far been based on hearsay.
Now, as we know how the following 'inconvenient' findings tend to rub some people the wrong way, a couple of qualifications:
- 500 financial services professionals were polled between 28 November and 7 December, before last week’s EU summit. So this poll is about the general sentiments on the EU negotiations, a UK 'veto' over financial services and attitudes to the cost/benefits of EU rules and market access.
- At Open Europe we maintain that access to the single market has by and large been beneficial for UK businesses, which is why we were very surprised to see such a large share in the business community expressing such qualified support for it.
- We were keen to qualify our key 'veto' question by flagging up that such a tactic could compromise market access. This point is vital, as a substantial chunk of the media narrative in the last few days has been that the business community now perceives itself as worse off than before the summit (again, this is the narrative not necessarily the reality). But our poll would suggest that this is a risk that businesses are actually willing to take - which again, surprised even us.
- Overwhelming support for a UK veto on EU financial regulation even if it reduced market access to the EU: The ComRes survey finds that 69% of financial services professionals say that they would support the UK having a veto on future EU financial regulation and other financial measures, even if it risked reducing their firm’s market access to one or more EU countries.
- Concerns about the cost of EU regulation: The poll finds that 56% of financial services professionals think that, on balance, the costs of EU financial regulation currently outweigh the benefits of the Single Market to the City, while 31% disagree. Over the next five years, 62% expect the costs of EU regulation to outweigh the benefits of the Single Market, while only 24% disagree.
- 70% think the UK should renegotiate the EU Treaties to safeguard the City: While the Single Market is seen as important, surprisingly, a full 70% think that the UK Government needs to renegotiate the existing EU Treaties to safeguard the City of London, limiting agreements to trade and association only.
- Eurozone-only financial transaction tax (FTT) would have a negative effect on finance firm’s UK operations: Given that the UK and other non-euro countries are opposed to an EU-wide FTT, the likelihood of a eurozone-only FTT being proposed has increased. If the eurozone went ahead with its own FTT, without the UK, finance professionals think this would still have a negative effect on UK firms. 55% say it would have a “negative effect” on their UK operations. If an EU-wide FTT, including the UK, was introduced, 48% of financial services professionals say they would consider moving some of their activities to outside the EU.
- UK regulators are perceived to have a better understanding of financial markets than EU regulators: In contrast to EU-level regulation, financial services professionals are less likely to agree (40%) that the costs of UK-derived Financial Services Authority (FSA) regulation outweigh the benefits, than disagree (47%). Only 22% of respondents agreed that the EU institutions have a better understanding of how financial markets operate than the UK’s FSA, while 62% disagree.
As our survey and the graph above clearly demonstrate, in financial services in particular, a key sector of the UK economy, a majority already believes that the cost of complying with existing and new EU regulations outweighs the benefits of access to the single market. And even more are concerned that this will be the case in five years time.
See a full summary of the poll here.