Bank Lobby Group Says EU Exit Would Hurt London Financial Standing

A British exit from the European Union could wreck London’s position as the only financial center to rival New York and isolate the country’s economy, research ordered by a lobby group for banks and money managers showed.

Prime Minister David Cameron has promised to renegotiate the terms of Britain’s EU membership and hold an “in-out” referendum by the end of 2017 if his Conservatives win a 2015 national election.

But many of the most powerful banks, insurers and money managers in the City of London are increasingly concerned that Cameron’s gamble could allow the country’s $2.5 trillion economy, the world’s sixth largest, to slip out of the EU.

TheCityUK, whose members include asset managers, banks, insurance and accountancy firms, warned that Britain outside the EU would be shorn of influence, less attractive to investors and vulnerable to regulations over which London had no influence.

“This is yet more powerful evidence that the UK pulling out of the EU is the very last thing our country needs. It will kill our hard earned recovery … We will be left isolated in the margins and our future prosperity will be limited for generations,” Chief Secretary to the Treasury Danny Alexander will say in a speech on Monday, according to advance extracts.

“This rigorous and in depth work clearly shows that leaving the EU will lead to higher prices, higher unemployment, lower growth and lower real wages,” Alexander, a member of pro-EU junior coalition party the Liberal Democrats, will say.

London dominates the $5-trillion-a-day foreign exchange market, trading twice as many dollars as the United States and more than twice as many euros as the entire euro zone, according to the lobby group.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza