UK’s vote on Europe ‘puts off investors’
Alderman Roger Gifford, Lord Mayor of the City of London, says the prospect of the UK leaving the European Union is a greater concern to international banks and other major financial institutions than Scottish independence.
Speaking to Scotland on Sunday during an official visit to businesses and arts organisations in Dundee, Perth and his native St Andrews, he said: “The real concern if you are in Japan or Korea is that you do not want the UK to leave the single market – the UK is your gateway to Europe.
“I have just been in Japan and they also really value having what they see as a sensible UK voice in Europe.”
Prime Minister David Cameron has promised to hold a referendum on EU membership if the Conservatives win the next general election. He hopes to secure the return of some powers from Brussels before campaigning in favour of remaining in the treaty.
However, following the success of the anti-European UK Independence Party in English local elections, some disgruntled Tory MPs are trying to force a vote, as early as this week, on holding a referendum before 2015.
Gifford, who is spending much of his year in office touring the world to promote British business, said UK ministers are more supportive of the business case for the EU than they dare voice publicly.
“The government has come round to being more conscious of the contribution to the economy that financial and professional services make,” he said.
“They are concerned that single market access is maintained, but we recognise the political reality on the ground.”
He said foreign banks, insurers and asset managers in particular are worried by the prospect of the UK reducing its ties to the continent.
Many multinationals use Britain as an entry point into the huge European market because of its language, business culture and stable legal framework.
Financial institutions also appreciate the links between London and hubs such as Edinburgh, Glasgow, Leeds and Liverpool where they can source professional services to support their operations.
The Lord Mayor, who acts as an ambassador for the City and financial industries, said: “At the moment the UK is seen as a safe haven for money, and we are seeing that reflected in London’s housing market, on the stock market and among British asset managers.”
The Scot, who became the first banker since the financial crisis to wear the City’s chain of office when he was sworn in last November, has said previously that he has no view on Scottish independence but that, should it come about, London’s financial powerhouse would work to ensure valuable business links remain intact.
Pressure for the break-up of both the UK and EU has mounted since the financial crisis as resentment brews amid an ongoing economic depression. Struggling households should receive some good news this week when outgoing Bank of England governor Sir Mervyn King presents his final quarterly inflation report.
Economists say Wednesday’s update should reflect signs that an economic recovery is taking hold, albeit slowly.
Although it will acknowledge that inflation is likely to remain above the core target of 2 per cent for the foreseeable future, recent falls in commodity prices should allow the bank to tone down its warnings on price rises in order to leave the door open for further stimulus once new governor Mark Carney takes over in July.