I refer Members to my declaration of interests, as I am still actively involved in financial markets—though I am glad to say not in market abuse—and particularly in emerging markets, which has become more relevant in Europe. When I started in emerging markets, Greece and Portugal were such, and I have a feeling that they may soon be classified as emerging markets again.
I support the Government on not opting into the current criminal sanctions proposed by the European Commission. It is classic European Commission stuff. The Commission thinks harmonisation would be very useful because it is concerned about regulatory arbitrage. Regulatory arbitrage ignores the strength of the British position—that people want to trade in London. They are not particularly interested in trading in a Bulgarian bucket shop. Therefore we should remember the strength of our position and not be cowed by feeling that everything across Europe must be the same.
When we look at the wonderful documentation, we are reminded that the great joy of anything to do with Europe is that it provides thousands of pages to read and inwardly digest, almost always written in a form that is as impenetrable as possible, which is part of the problem with the European Union, as the hon. Member for Nottingham East (Chris Leslie) so wisely pointed out. There is such confusion in how laws are developed that very few people manage to get to grips with them.
I wish to quote a short excerpt about why the Commission wants the criminal sanction to be brought together. It is so that member states
“can contribute to ensuring the effectiveness of this Union policy by demonstrating social disapproval of a qualitatively different nature compared to administrative sanctions or compensation mechanisms under civil law.”
That is fine, except that we are already doing it. The Government have already said that all the criminal offences that the European Union wants to bring together are covered by our own law, so it is hard to see why they then argue that it is essential that there should be harmonisation.
It is important to remember, with this opt-in at this stage, that if we opt in we cannot opt out again. This is not going to be part of the block opt-out of opt-ins that we can get by 2014. Anything that we opt into at this stage is permanent, so we would have a permanent criminal sanction agreed at the European Union level, which may not be suitable for what we want in this country.
The real problem is that Europe is the wrong area of focus for this country when it comes to financial markets. I know that we have a large market share in a whole range of financial products, that about 80% of hedge funds in the European Union are based in London and that we do more than a third of all global foreign exchange transactions. However, I thought that it would be interesting to look up where we rank across the whole range of financial services. There is an index, “The Global Financial Centres Index”, which ranks countries and capitals by a variety of measures to show how successful they are in financial services. It includes the people they have and their skills, and the depth and breadth of their markets. When we look at it, we see that London comes first, which should not surprise us. New York comes a fairly close second, followed by Hong Kong, Singapore, Tokyo, Zurich, Chicago, Shanghai, Seoul, Toronto, Boston, San Francisco and then Frankfurt. Germany, at 13th, is the first European Union country with a financial centre on the list.
We should not be worrying about co-ordination with Europe. To do so is to look at the past, at an outdated and outmoded form of competition. We need to look to the broader world, to the people with whom we really compete: Hong Kong, Shanghai and, of course, New York. Therefore, the Government must show some backbone by not giving in to more Europeanisation, because that is what has been done previously, that is what the EU is used to, and that is the comfort zone of the bureaucracy. We need to look at how our arrangements and regulations compete with the further world, not with what might be called the near abroad. If we do that, we will find that we want our own regulation and we want less European regulation, and we can negotiate from a position of strength, because the financial markets in the United Kingdom are overwhelmingly larger than those in continental Europe.
Therefore, I support the Government in not opting in, but I do not support them in qualifying it by saying “at this stage.” There is no need for any further transfer of powers to the European Union. That is part of the coalition agreement and we should never opt in to anything further in future.
9.2 pm