Exit from the EU could hit financial standing

Gerry Grimstone
Gerry Grimstone
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CITY heavyweight Gerry Grimstone has waded into the debate over Britain’s relationship with Europe, warning that an exit from the single market will threaten London’s dominant position in global financial services.

The chairman of Standard Life and industry lobby group The City UK claimed that the European debate is of “existential importance” as Conservatives backbenchers lobby for a public vote on EU membership next year.

Chris Cummings, chief executive of The City UK, told the Yorkshire Post that fewer jobs would be created in regional centres like Yorkshire if the nation decided to quit the trading bloc.

Speaking at a dinner in London, Mr Grimstone said: “To put my cards firmly on the table, I do not believe the City’s pre-eminent position will survive if we lose our role as Europe’s financial capital, and I do not believe we can maintain that position if we are not part of the single market.

“Europe is a subject that has traditionally been so divisive that even to discuss it has meant risking being branded a fanatic. But that situation is changing.

“Decisions will be taken both here and on the continent that will determine not just the relationship between Britain and the rest of Europe, but London’s position as a global financial centre.

“The European debate is of existential importance, and one in which the City must play an active role.

“Our key task is to help create the right conditions to drive economic growth in the UK by ensuring that in financial and related professional services, this country is, and remains, the best place in the world in which and from which to do business.”

The single market, which came into being in 1993, allows for the free movement of goods, people, services and capital.

Prime Minister David Cameron has said the Conservatives will hold a public referendum on membership in 2017 if they win the next general election, but he is facing calls from some Tory MPs to bring the vote forward to 2014.

The majority of foreign investment in the UK is from global financial services firms, according to The City UK.

Mr Cummings, who is from Leeds, said: “International businesses come into the UK and create jobs around the country in order to access the single market. They don’t come for a market of 65m people, they come for a market of 500m people.”

The financial services industry employs 144,000 people in Yorkshire, which equates to 6 per cent of the region’s workforce; the sector also contributes £11bn to the local economy, added Mr Cummings.

He said: “I don’t think those jobs would disappear overnight, I’m not going to be alarmist.

“We monitor foreign direct investment and look at the trends... and the UK would look much less attractive than other EU member states and certainly if the UK was no longer a member then firms would need to rebalance their operations into Europe.

“Major businesses already have operating centres in France, Germany and Italy.

“We would see less investment in the UK and that would mean fewer jobs being created and other European member states would benefit from that.”

The City UK is researching the views of financial sector leaders on the relationship they want with Europe.

Its findings show that business leaders believe a stable eurozone is vital, whether or not countries use the euro as their currency.

They also believe that Britain should be seeking to develop and strengthen the single market and champion “pragmatic and harmonised” regulations and get rid of unnecessary red tape, claimed the lobby group.

Mr Grimstone said the Bank of England and the European Central Bank have an important role to play in ensuring that financial institutions both inside and outside the currency bloc can access liquidity, even at times of stress.

In his address at Mansion House, the carpet fitter’s son called for the chairmen, chief executives and boards of financial services companies to ensure that the sector becomes known for “doing the right thing”.

Mr Grimstone said: “As one of the longest-serving financial services chairmen in the UK, I’m acutely aware of the responsibilities, working with our CEOs and our boards, which I and my fellow chairmen and senior partners have.

“Successful businesses all have a moral dimension to their activities, but particularly in financial services, our ethical responsibilities go considerably beyond the pursuit of shareholder value.

“We have to recognise this in the way we construct our agenda and priorities. There is a responsibility on companies to put themselves in the shoes of their customers.

“Not just to mouth the words that the customer is at the centre of their business, but to walk the talk.”

Nissan says it’s vital to be part of the union

ONE of the North’s most important foreign investors has warned Britain against quitting the European Union.

Nissan said that an exit could create obstacles to future investment in the automotive sector, a standout success story of UK manufacturing in recent years.

Toshiyuki Shiga, chief operating officer, told The Times: “The UK is part of the European Union – that’s very important.

“From the foreign investor’s point of view, I hope that the UK will remain an EU member.”

The Japanese carmaker employs more than 6,000 people in Sunderland. The North East factory’s supply chain supports 24,000 jobs.

Mr Shiga said: “If the UK, after departing from the EU, made unique regulations, unique standards, that would become an obstacle.”

He added: “If the EU side put important duties on the UK, that would be a big obstacle. It depends what happens after leaving.”

Nissan started production of its new Note car at Sunderland last month following a £125m investment at the site.

Nissan has applied for permission to further extend Britain’s biggest car factory.

The Sunderland plant produces around 500,000 vehicles annually.

This is expected to increase to more than 550,000 in the coming years.