Europe is in economic decline, dragged down by the folly of the euro. We need to take back control
In business, if you fail to adapt you die. My online financial trading business,CMC Markets, is booming because we have ridden the waves of technological change. Half of our business is on mobile devices, a change unimaginable 25 years ago.
The same is true for competition between countries. Systems need to stay flexible so that wealth creators can flourish and adapt to new realities.
The concern for many business people is that our politicians have tied us to a relic of a political system in the European Union that is unable to cope with the challenges of the 21st century. Europe is in economic decline – dragged down by the folly of the euro. We need to loosen the shackles and take back control.
The proportion of the UK’s financial services exports that go to the EU have dropped significantly in the past decade. We should be opening ourselves up to opportunities in fast-growing markets, not getting bogged down in European bureaucracy and stasis. The EU Single Market system is hugely influenced by the lobbying of big established companies but it is in Britain’s interests to encourage entrepreneurs and new industries. We don’t want to be part of a system that props up politically powerful corporations at the expense of new businesses that help consumers.
The UK has little control over its own trade policies. When British politicians go on trade missions to fast-growing economies like China, they are not allowed to talk about reducing trade barriers. For a country with a proud global trading history like the UK, this makes no sense.
Do you know the only two countries in Europe with free trade deals with China? Iceland and Switzerland. Both are outside the EU and in control of their destiny – that is what I want for Britain again.
The EU is also undermining companies in their attempts to compete globally. Its insistence on forcing new pay rules on European firms’ operations in Shanghai or on Wall Street means that European banks are struggling to hire the best talent in those markets. Their plans to split up European banks and their branches across the globe creates huge costs but provides no new stability to UK taxpayers, whose banks are already being ring-fenced.
Major insurance firms such as Prudential are weighing up whether to move their headquarters out of Europe altogether to escape the onerous Solvency II regulations.
Some people worry that the UK outside the EU would set different rules, undermining trade and making business more expensive. But financial services rules are set globally. If the UK leaves the EU we will still have our seat on these global bodies, but the way we implement these rules will be more suited to the UK’s position as a global leader.
Absurdly, we have wholesale banking rules imposed on us by other EU countries which don’t have a capital market at all. As Mark Carney, the Bank of England Governor, said recently, the EU has undermined our ability to make our financial system safer in some key ways. If we vote to leave, we will be able to pass rules that fit our vast financial markets and properly protect UK taxpayers.
Some doom-mongers argue that the City of London would suffer outside the EU because Europe would start a financial services trade war with the UK. But this ignores the facts. The EU treaties explicitly forbid restrictions on the free movement of capital between EU countries and the rest of the world.
What’s more, London is Europe’s primary capital market and EU firms will still need to do business here. Big French, German and other European banks have huge investment banking divisions in London and so it will be in everyone’s interests to get a deal.
London’s skilled workforce, respected legal system, language and the ecosystem of professional services firms that exist to support the City cannot be easily replicated.
My friends who work in banks privately rubbish public suggestions by their corporate PRs that they might be moved to Frankfurt, Warsaw or Zurich if we left the EU. They ridicule the idea that they might move to Paris, where it would be impossible to sack poor performing investment bankers in a downturn. They want to be in London because it is one of the most vibrant cities in the world.
As a recent CEBR study found, we are on course to become the world’s fourth largest economy. So don’t listen to politicians like Nick Clegg and Peter Mandelson who will talk Britain down and say that the world will end unless we vote to remain in the EU. Those politicians – and the EU-funded CBI – said that if we didn’t sign up to the euro millions of jobs would be lost.
In fact, the opposite was true, London’s financial markets thrived outside of the euro. Not joining up to the single currency was one of Britain’s best decisions in recent years.
The real risk in this referendum will be whether we decide as a country to stay in an EU that is holed below the water line and taking on more water. This is the only chance we will get to jump out before the whole ship sinks.
If we do we won’t just survive – we will thrive. London was a financial powerhouse before we joined the EU and will grow even more quickly after we vote to leave. We will increase our trade with the rest of the world and be a more vibrant economy for it.
Peter Cruddas is chief executive and founder of CMC Markets and a treasurer of the Vote Leave campaign