I chaired a really interesting debate yesterday between MP John Redwood and former MEP Baroness Sharon Bowles at the Association of UK Payments Institutions conference. The discussion was should we stay or should we go, or the Brexit if you prefer.
John Redwood has spent years as a Eurosceptic, standing against John Major in the 1990s for the leadership of the Conservative Party based upon his anti-European stance and author of a book: Just Say No!: 100 Arguments Against the Euro. Sharon Bowles was heavily involved in European regulations covering everything from the PSD to AIFMD, and has been called one of the most powerful women in Europe alongside Angela Merkel.
John kicked off, and here’s my loose notes of what was said [note this is not an accurate recording of the whole debate].
Read the Five Presidents Report from last summer and you will see that Europe’s plan is full financial and political integration long term. That is their objective. The Five Presidents are the Presidents of the European Parliament, European Commission, European Council, European Central Bank and the Eurogroup. In their report, it is clear that member states of the Union must, over time, cede their sovereign status to the Single Market:
Progress must happen on four fronts: first, towards a genuine Economic Union that ensures each economy has the structural features to prosper within the Monetary Union. Second, towards a Financial Union that guarantees the integrity of our currency across the Monetary Union and increases risk-sharing with the private sector. This means completing the Banking Union and accelerating the Capital Markets. Completing Europe’s Economic and Monetary Union 5 Union. Third, towards a Fiscal Union that delivers both fiscal sustainability and fiscal stabilisation. And finally, towards a Political Union that provides the foundation for all of the above through genuine democratic accountability, legitimacy and institutional strengthening.
This is not a march towards autonomy but a movement towards giving up our national decision making to a group that does not have our interests at heart. If we leave however, nothing changes. If we leave, we do not ruin Europe. We just have everything as it is today, but we can keep our national interests at heart.
There is this myth that if we Leave, it will cause an Apocalypse or Brexocalypse if you prefer. This is not true. If we Leave, nothing changes. The only things that change are where we want them to change. In the Leave campaign, we have only two things we want to change. We want to control our money. That means cancelling our subscription to the Euro Club that costs Britain £10 billion a year. It means that we negotiate out of the common fishing and agricultural policies that give Britain no benefit at all.
Secondly, we want to have full control of our borders, so that we can manage a fair and equitable migration policy. This does not mean zero migration, but it means that we apply the same rules to European migration as we apply to non-European migration. It does not mean free and open borders, but borders that can manage the demands of immigrants and emigrants.
If we Leave, does this mean we lost the benefits of passporting across Europe? Not necessarily. We only lose benefits where we choose to lose them or where Europe determines we can no longer have them. As the financial centre of Europe, do we lose the benefits of financial passporting across Europe? Of course not, unless we want to. After all, on June 22 we have the highest level of implementation of European regulations in any market. Does that change on June 23? No. Our markets are still regulated in the same or higher levels than in Europe on June 23.
Equally, will we be ignored or ejected from discussions if we Leave? No. It’s just a new trade agreement structure and the Germans, who control Europe, will be very open to this. We are their customer. We buy twice as much from Germany as we sell them, and Germany does not want to jeopardise this. They want to keep us on side. If we stop buying German products, they will lose twice as many jobs as we would, so it’s in their interests to keep us on side. We are the customer.
Sharon Bowles then presented the arguments to …
Just a few decades ago, Europe was fragmented and hostile. We had dictatorships in Spain and Greece and Eastern Europe was blocked off from the democratic world. How that has changed. The Europe we have today is far more free, stable and open than it’s ever been, and is a trading block that can stand up to China and America as one of the three major economic areas of the world. On the migrant question, what is the problem with migration? If we had not opened our borders to European access, Britain would be failing today. In 2000, British couples were not producing enough children and our population was in decline. Without migration, we would have many old people retired and zero workers in our cafes, bars and hotels. Thanks to Europe, we don’t have that situation. Thanks to Europe, we have an expanding economy, not a contracting one.
The United States of Europe is therefore a good thing. There are bad things. Our failure to reform the common agricultural policy for example, but the general move to Economic and Monetary Union has been a positive force for good.
Now we are moving to a Banking Union, and that causes concerns about sovereignty. Handing over Banking Supervision is a sovereign decision, and we may worry about the outcomes but the results are a better relationship between Britain and Europe. The Bank of England is a pivotal force in framing European Central Bank decision making, and the Bank and ECB have a fantastic and close working relationship. In fact, ECB policy making is far more in line with PRA (Prudential Regulatory Authority) views than expected. We wrote the rules for much of the Banking Supervision structure and, at every state, we have been consulted and involved. We would not have that access and influence if we were out of Europe.
Equally, the ECB is not a country, but a representation of all countries. For this reason, it sets loose directions for all and tight direction for the Eurozone. So we are not subject to tight fiscal and monetary policies as Eurozone countries are. That gives us great flexibility whilst maintaining influence.
In particular, we sit between America and Europe and, because of our so-called special relationship, we never stand up to America. The UK Parliament kow-tows to the US at every turn. But Europe does not and, by being part of Europe, we can do that. For example, in debating the Basel rules after the financial crisis, the UK would have had no influence at all but, as a UK representative in Europe, we had 100% influence over how Basel principles were drafted. If we had been alone we would have just been rolled over. As a united trade area, we are not.
In fact, the UK would become like Switzerland where Switzerland signs a trade agreement with China that allows all Chinese goods to be imported to Switzerland whilst Swiss watches – their core product – is subject to tariffs across China.
At the end of the debate I asked for a show of hands as to who wants to Remain (95% of the audience) or Leave (5%).
But this was a City debate as the man on the street probably sees the world differently (see Robots against Humans is like Spock against Kirk) and banks want the UK to remain in Europe due to the costs of exit (Banks bet Brexit brings Britain down).