Press Release, 31st July 2007

In a new paper for Global Vision, economist Keith Boyfield looks at the threat the Financial Services Action Plan (FSAP) poses to the City of London's global competitiveness. 

Over the past 20 years, the City has witnessed spectacular growth and now stands as one of the world's leading financial powerhouses.  Looking ahead, though, the major growth opportunities in financial services may well focus on rapidly liberalising markets such as the BRIC nations.  Businesses could simply relocate to other areas of the world which do not have the high levels of regulatory burdens as witnessed in the EU. 

Judged overall, the FSAP threatens to saddle London with an unnecessarily rigid regulatory grip really designed for retail markets, not the City's sophisticated wholesale markets.  Furthermore, the FSAP may jeopardise London's ability to exploit new opportunities to win business in the developing world.

Whereas the US government is seeking to roll back the regulatory tide damaging New York (London's biggest competitor), the British government will not be able to do this with the FSAP, because the UK is a member of the EU. 

"As it would be free from the regulatory shackles of Brussels," Boyfield argues, "the new, looser relationship between the UK and the EU promoted by Global Vision could ensure The City stays at the forefront of a globalised economy."   

He also added, "It is worth asking whether one can really ever achieve a single EU market without a single legal system, a single tax system and a single EU wide financial services regulator?"