The Renegotiation - Eurozone governance and UK financial
The Renegotiation does not resolve the “Economic Governance”
problem: as the Eurozone integrates further UK financial
services are left exposed
Lawyers for Britain has published a major report The UK Renegotiation: What has it really achieved?
authored by Martin Howe QC and City Lawyer Eric Phillips. In a
detailed 25-page analysis, it chronicles the series of serious problems
which have arisen for UK financial services and the City as a result of
tensions with the Eurozone and the fact that UK financial services are
subject to an EU regulatory apparatus which is dominated by the
Eurozone member states. It closely scrutinises the text of the European
Summit Conclusions Feb 2016 and asks whether these problems have been resolved. Its conclusions are stark:
- The Renegotiation does not resolve the “Economic Governance” problem
and does not adequately protect the UK’s financial services sector or
the ability of UK authorities to maintain financial stability in the
UK. In the future, as the Eurozone proceeds to integrate further
without the UK, it is likely that the Economic Governance problem
- The tensions underpinning the UK’s relationship with the Eurozone remain.
The Eurozone needs to integrate further. The plan for this has been
adopted and is contained in the “Five President’s Report”. The Eurozone
has a legislative majority in the Council of Ministers and can
therefore pass any legislation related to financial services even if it
is not in the UK’s interests.
- To resolve the Economic Governance problem would require a fundamental overhaul of the EU Treaties. This has not been achieved.There
is no acknowledgment in the Renegotiation that the EU is a
multicurrency union. Jean‐Claude Juncker said on the day the
Renegotiation concluded: “Today's deal leaves no doubt that the euro is the currency of our Union”.
- The Economic Governance principles in the Renegotiation are deliberately vague.
Rather than clarify matters, they introduce a new uncertainty.
Discrimination on the basis of currency is prohibited, except if there
are "objective reasons". Specific provisions within the single rulebook
may be necessary, but the level‐playing field must be preserved.
Financial stability in the UK is a matter for our own
authorities, but this is without prejudice to the powers of the EU to
- The Safeguard Mechanism to protect the economic governance principles is simply the power to call a meeting. It is clear that the Safeguard Mechanism does not change the legislative process or give the UK a veto.
- Over the years the UK has had various disputes with the EU
related to Economic Governance including the fiscal compact, the
financial transactions tax, short‐selling, the location of euro
clearing‐houses and macro‐prudential requirements of financial
institutions. The terms of the Renegotiation would not have resulted in a different outcome in these disputes.