You previously said you aren’t in favour of the UK holding a referendum on EU membership. Why?
The problem with referenda is that they are more emotional than analytical. We in the City like to be more technocratic about things. We like to have a good economic narrative along with analysis rather than having emotion over taking everything.
There is a strong majority of people within the City of London who would like us to stay within a reformed Europe. Why? Because there is a very strong argument that we have the largest financial sector in the world and the financial centre for Europe. There are 500 million people in Europe, and we want to be able to offer them financial services without barriers and without tariffs.
A Brexit could put that at risk.
What reforms would you like to see in the operation of the EU?
I would like to see labour market reforms with more flexibility. In volatile economies, you’ve got be able to put your foot down and accelerate, and be able to break. The single market has to be fully developed, barriers need to come down, insurance has to come down. We should stop talking about putting barriers on trade such as the financial transaction tax. We’ve got to have a greater consideration of the competitive world.
We are going to have to compete with some very fast growing economies with some very bright people. We’re going to feel the pressure increasingly over the next 10-20 years, and of course there is the ageing problem. The demographics of Europe are not clever. The fertility rate in Europe doesn’t facilitate a risk loving, entrepreneurial attitude to life.
Are you worried about eurozone members caucusing the single market?
The single market is the whole point of it. If you have caucusing, it breaks it apart. I think you need one set of rules for all 500 million people, but it doesn’t keep me up at night.
Are there changes to the single market you would like to see?
Insurance is still very regional and parochial. Some markets have got greater attention than others, but insurance is going to be very important. Spreading risk around people and getting a better average expectation is a good thing today.
Nearly every single economy has obligations to be people who have been saving for 30-40 years. If you can find some sort of utilities earning for these people, you can get infrastructure built. Insurance is long term money. It can fund infrastructure, and infrastructure can help the economy.
What do you think are the pros and cons of current plans for a Europe-wide Capital Markets Union?
I think the evidence is that if you don’t have a mature corporate bond/private placement market, you increase reliance on banks. I do think that because Europe only has a relatively immature alternative market outside of banks, it meant that when the banks had to start building their capital bases, it detracted from making revenue available to business. Sophisticated capital markets put less pressure on the banks.
There are lots of concerns. We’ve got to have complete and utter access to all capital markets in Europe. You couldn’t possibly have a eurozone clearing system that has to be cleared in Europe.
I think the ruling prohibiting that on the grounds of competencies showed that in Europe they are objective and sensible.