Why the UK’s title as the financial centre of the world is under threat from EU legislation?

London is one of the main financial centres in the world for foreign exchange trading where the Euro bonus are widely used for this purpose.

The current agreements between the UK and the EU related to trade, commerce, competitiveness, banking supervision or tax regulations may require a revision to solve some loopholes between these partners. Since the in-out referendum proposal to leave the EU before 2017 is being debated, some problems between the UK and the EU have been revealed.

New regulations from the EU could affect the financial system established in the UK, but how? Opinions are divided between the Euro skeptics and the pro-European about the consequences of the UK versus EU relationship would have after the negotiation agreements.

Banking union

The financial and economic crisis has unveiled the Euro weaknesses as a single currency. Therefore, the Eurozone Central Bank set a common banking supervisor to monitor the major banks in the threshold of the single currency.

In contrast, the European Banking Authority which regulates also UK banks could marginalized the UK “by setting liquidity and capital requirements for the biggest banks in the Euro area, will favour those institutions at the cost of the UK’s,” according to a Quartz analysis made by Lily Kuo (17 May, 2013). It is also added that a negotiation that took place last year included a clause about the no-marginalization of any EU country under this union. Moreover, a voting system will be introduced for all EU members about the banking union system.

Tax regulation

The Financial Transaction Tax (FTT), the so-called Tobin Tax, has been imposed to 11 Eurozone countries to pursue a levy on financial transactions. The UK abstained in vote although they are also tackling issues of tax avoidance among some companies established in this country.

This tax could end up adding a small change in the trade between the UK and the Eurozone countries, although it could also attract some more businesses to the UK. The future of this strategy cannot be foreseen yet.

UK vs EU relationship

It is not clear whether the exit of the UK from the EU would bring a better situation, but the uncertainty could have negative consequences for the British market. Also, the Scottish referendum in 2014 would have as a main point the EU situation. If they want to belong to the EU they could have a better chance leaving the UK and apply later to become an European membership, rather than staying in the UK and later being dragged out of the EU. This is also an important aspect to consider here.

Perhaps the dilemma is not regarding the new regulation of the EU, but the deteriorating relationship between the UK and the EU. Things can improve, however extreme positions might damage both financial markets rather than gaining any benefits, and amid the economic situation, the consequences must be well analysed before talking any misstep. 

In- Out referéndums

Nowadays, there is a question about if belong to a Union or not, if belonging to a country or getting independence. Why is it all about? and Why now? 

In the UK the EU referéndum can be a double edge sword. Scotland wants to stay in the EU, so they may get a better change if the leave the UK and then apply to the EU membership. However, if they vote in 2014 to remain as apart of the UK, they may vote therefore to stay in the EU in 2017. David Cameron, Primer Minister of the UK, on the side of the Conservatives is playing with fire. 

But the same situation can be applied to Mr. Mas, President of the Generalitat of Catalonia, Spain. They would like to get autonomy because they think they would be better as an independent state. Perhapps, but have they measure the consequences? Debt, EU membership, Spain vs Catalonia relationship, and so on. It is not an easy decision that can be taken fast, but quite the opposite it is necessary clear information of the situation, the difficulty to foreseen the unknown, and of course consensus and negotiations with the Central Government. 

The economic crisis is putting everything upside down. The EU today doesn not look as successfull as it did five years ago. Some territories want to have a referendum to leave it, and others to be a new state of it. What is it that? This "cherry-picking" is not viable today, and every member, country or territory must be solidary and work together to rearrange what one day it looked as a good idea. It is also necessary to protect national identities, what I think it is all about at the end. 

The "post-sovereign" world: The half-truths and the (crisis of the) Nation-States

II Part- Dissertation

Nationalism inside an existing country usually has two sides to the same story. This topic has several and contradictory interpretation of facts. This dissertation will analyse four aspects of the Spanish reality to make a clearer and more complete picture of the independence of Catalonia.

This sentiment has its foundation in a specific vision of Spanish history. Also, the divergence on the economic issue depends on how they look in the glass. The project will also address the problematic of the sociological aspects will be also explained. And especially, it will assess the importance of the role of the politicians and the interpretations of the events according to their vested interests.

Moreover, this dissertation will evaluate the role of the Nation-States in Europe in connection with independence movements. A wider perspective will be included with the examples of Scotland and Quebec. 

Austerity Measures Are Not the Solution to the EU Debt Crisis

The Economic and Financial Affairs Council at LIMUN 2013 agreed that the Eurozone crisis needs global solutions. Its consequences spread beyond the borders of the EU and affect an interconnected worldwide market. The most likely solution to solve this problem is by global cooperation and trade. Additionally, there is a need for urgent implementation of the fiscal union.

The EU debt crisis is an international concern. As the delegate for China Mattias Verbergt pointed out “it is about all nations fighting against time” to solve a problem that affects everyone. The current financial market is so integrated that all nations feel the economic and financial consequences of the Eurozone. For example, India is a major trading partner of the EU and has been directly affected by the Eurozone crisis.

There are other alternatives

Greece is one of the countries most strongly affected by the crisis. The solution depends on what changes are made to the financial system. The delegate of Greece pointed out that “Alternative solutions have to be explored. Austerity measures will only cause more social unrest”.

Delegate of China

Delegate of China

The delegates from Saudi Arabia and China expressed their concerns on the situation saying that “austerity simply does not work for the EU” and that “these measures are not the only way”. Stimulating measures are necessary to revive the Euro currency.

The United Nations must come up with specific solutions that will not include the disintegration of the single currency. The delegate for Greece explained clearly that the 170% GDP in the country must be addressed, and if not, “Greece will be more like to leave the Eurozone”. Austerity measures have been implemented in Greece without any positive results. However the delegate for Greece acknowledged that “the EU has supported Greece with financial assistance of €34.4bn in the second bailout, and this shows the commitment of the EU for Greece to remain part of the Union”.

More financial investment and integration

The Eurozone is facing a double-dip  recession, where the Southern European countries of Greece, Italy, Portugal and Spain are the worst affected. However, there are some positive examples too. The delegate for Italy said that the country won't ask for a bailout from the European Stability Mechanism (ESM). The delegate of Germany also stated: “Germany does not believe in the EU failing. We do not support austerity measures only, but we need control and supervision of member countries in order to see growth”.

Delegate of Germany

Delegate of Germany

All countries agreed that international cooperation is needed to face the debt default of the EU, and that protectionism and austerity are not the only solutions. What is needed is more economic and financial integration within the EU and international trading and investments with overseas countries.