EU: UK Isolation

Baroness Valentine Excerpts

Monday 22nd April 2013 Grand Committee

[Baroness Valentine]

My Lords, it is difficult to follow that. The question of this debate takes as its premise that UK isolation is a bad thing, but is that the case? In my role as chief executive of London First, I talk to many business people who have given serious thought to how a UK that is not part of the EU might fare. Some point to our historic success factors—an open business culture, our time zone, English law and the English language—none of which comes from Europe. They question whether our membership really makes it easier to do business in Europe than with, say, Norway. Further, they argue that our focus should be on the emerging economies. Others challenge the assumption that leaving the EU would damage London’s role as a financial centre. Supposing the EU were, in effect, to shrink to the eurozone, a new European financial centre would almost certainly emerge, but with an inward-looking focus, and meanwhile the UK would expand its global financial role.

However, it seems to me that these views merely represent pragmatic ways of dealing with a situation that few would actually welcome. Certainly, business people complain about red tape and employment law emanating from Brussels, but of those multinational companies that I speak to, not one has advocated divergent regulation within Europe. Furthermore, they understand the logic of negotiating global free trade agreements from a base of 500 million people rather than 60 million. While the need to shore up the euro necessitates reviewing relationships in Europe, I have yet to meet a senior business figure who would actively have sought a referendum at this time.

Continental Europe remains a major trading partner for the UK. We must value and respect that relationship. Let us not forget that for many companies, whether British, Asian or American owned, London is the location of their European head office. Any suggestion that the host country is at odds with other countries in the region is clearly unhelpful.

In financial services, what Europe needs is a financial centre which is competitive with the Americas and Asia. What the UK needs is friends to make that point, rather than enemies who resent the Anglo-Saxon business model. This is about tactics in Europe as much as whether one is a Europhobe or a Europhile. Some countries may wish to see London lose its position but there are also European firms and member states that value having globally competitive capital markets within our time zone. Certainly, tactically, it is not clever for the Chancellor to be voted down 26 to 1 on bankers’ pay, whatever way you look at it.

Therefore, my plea to government is not to risk vital relationships with political posturing. The only way to improve the relationship with Europe is to put two feet firmly inside the tent, identify allies and commit wholeheartedly to making the Union work for everyone’s benefit.