Cridland says EU regulations could ‘seriously damage’ the UK

Onerous regulation from Brussels could seriously damage Britain’s professional and financial services sectors, the head of the CBI warned last night.

In a speech to the organisation’s annual dinner, director‑general John Cridland pointed the finger at a raft of European Union regulations such as the controversial Financial Taxation Tax, Solvency II, the Capital Requirements Directive, audit market reforms and EU proposals on corporate governance.

Cridland told the audience that Britain had world‑beating professional and financial services companies. “We mustn’t countenance any policies that hold them back,” he said.

In a side-swipe at European Commission president Jose Manuel Barroso, the CBI chief said it was important the head of the EC made sure he was “working with business, not against it. And that means boosting professional and financial services firms, not battering them with costly reforms”.

Cridland added: “The likely effect of many of Brussels’ current proposals will be to damage the UK’s prospects for growth. Nowhere is this more acutely the case than for professional and financial services, which are being bombarded with unwarranted regulation.”

Scotland is Britain’s second biggest financial services sector after the City of London, with strong hubs in Edinburgh and Glasgow.

With Mayor of London Boris Johnson in the audience, Cridland highlighted what he said would be the damaging consequences for the City of the proposed financial transaction tax. He branded the tax “a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”.

Cridland said the European Commission’s own analysis showed that the tax – also known as a Tobin tax – could dent the EU’s gross domestic product by €100 billion (£87.2bn).

“The tax would be an incredibly blunt instrument, one that would increase the cost of capital for businesses, hold back their growth potential and raise minimal revenue in return,” he said.

“And it’s a policy that will penalise the UK as Europe’s leading financial centre, diverting activity to financial hubs like New York, Singapore or Hong Kong. Believe me, there’s nothing its financiers would like to see more than London totalled by a Tobin tax”.