Margareta Pagano: To stay in touch with the EU, we need a third way
With fewer officials in Brussels corridors of power, the UK's voice is being stifled, but that doesn't mean the choice is the stark in or out
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Sunday 25 November 2012
One of the more fascinating statistics to emerge from the EU recently was not the number of bottles of wine stashed away in the Brussels wine-cellar – 42,789 bottles and nearly 2,000 of spirits – but the lack of British officials available to taste the fine wines.
Over the past 20 years, the number of British professionals working directly for the EU community has dropped from 20 per cent of the total employed to a tiny 2 per cent – even though the UK's population as a proportion of the EU's has only dropped from 16 per cent to 12 per cent.
It's a huge drop and, wherever you stand on the merits of the EU, it goes far to explain why Britain's influence at the heart of the Brussels machinery has suffered and why we so often fall flat-footed on the big issues of the day such as the current negotiations over the EU budget.
As anyone in Brussels – or Whitehall – will tell you, it's the officials who work on the directives and the horse-trading that goes on behind the scenes that lead to the recommendations that get decided on. If the UK doesn't have enough of those top diplomats shuttling between Strasbourg, Westminster and Brussels, then we get left behind while others are making the rules. To make matters worse, we then follow those rules – rather than ignore them, as countries such as France so often do.
While the Prime Minister has been right to push for a freeze to the seven-year $1 trn budget, he knows this latest bit of sabre-rattling is a frivolous side-show in our relations with the EU. His biggest headache is going to be a referendum; and if he doesn't hold one, it could cost him the election. He also knows that if there is a referendum – which has been promised on treaty changes – then the quitters will win.
All the opinion polls show a majority of the British public is against. But the more worrying change for the coalition must be the astonishing shift in attitude within the business world and in the City over the past few months: from a positive view to a more negative one.
It's an amazing about-turn as the EU's single market, even during the downturn, is still our biggest trading partner by far; an area where our financial services industry still dominates, as it accounts for 35 per cent of all the EU market. As a free trade area, it gives the UK the best platform to launch into new markets such as selling mortgages and life insurance into China.
But the City's great fear is that as EU power extends and banking union comes closer, the UK will get left out and find its voice silenced on how regulation is being created. It's what everybody in the City is talking about right now. Even the Europhiles, in industry and banking, are quietly predicting, and some are calling for, a Brexit.
Yet there is a third way. It's the one being explored by the Fresh Start Project, an alliance of a 100 or so MPs from all parties and various think-tanks, which is researching the 11 most important areas – from worker directors to financial regulation – where the UK and EU lock horns.
It's a serious bit of research. And working together with the All Party Parliamentary Group for European Reform, the group is looking at how some EU rules should either be renegotiated or reformed to get the right relationship with Brussels. Andrea Leadsom, a Tory MP and one of the Fresh Start founders, says a manifesto should be ready in the New Year. She is hoping that the Government can use it as the basis for grown-up negotiations, rather than the constant sabre-rattling.
As Ms Leadsom says, it's time the UK did what it does best: get out there and do some proper trading again.
Shareholders will surely insist investment banks learn from Adoboli
With a name like Lex van Dam, the Dutchman could only have been a trader. But the former Goldman Sachs banker, who risked $1m (£624,000) of his own money to create the Million Dollar Traders TV series to prove how novices with training could trade as well as the experts, is turning out to be rather a philosopher, too.
In a thoughtful article in the FT last week, Van Dam suggested that Kweku Adoboli, the trader at UBS who was sentenced last week to seven years in jail for nearly breaking the bank, should be seen as a symptom of the City's greed rather than as the rogue trader hell-bent on making personal gain.
To him, Adoboli came across as a decent chap, one whose defence was that his trades started to go wrong and he was trying to make his money back; just as most people in the City are trying to do.
It's impossible to know the truth about Adoboli's motives, but what is clear is that the young man was acting more as a gambler than as a trader.
As Van Dam points out, Adoboli wasn't a wannabe-trader-turned-gambler trying to make up for his losses. By upping the stakes, he played higher and higher. What's more, he was gambling with his employers' money.
So, asks Van Dam, do you blame the company that was careless and defrauded and whose money was lost? Or do you blame the casino? Do you blame the fraudster, the victim or the beneficiary?
These are interesting questions and are no doubt causing sleepless nights for the heads of the world's biggest investment banks that still have potential Adobolis trading their books.
Indeed, it may well be that Adoboli's $2bn loss could teach the investment banks a lesson that even the credit crisis did not; and force them to be serious about how they risk their capital which belongs to their shareholders.
If they don't, shareholders will surely demand that these full-service investment banks are broken up, just as UBS is having to do.
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