In These New Times

A new paradigm for a post-imperial world

Cameron spins the City’s demise

Posted by seumasach on February 21, 2016


Cailean Bochanan

21st February, 2016

It is unusual for the British establishment to risk a consultation with the people unless major changes are underway- changes which are sufficient to provoke divisions in the establishment itself. It goes without saying that the negotiations with the EU are not essentially about child benefit for Polish families living in the UK. They are about “sovereignty” although in a very limited sense: the “sovereignty” of the City of London. The deal struck triumphantly by Cameron is revelatory. It shows that conflict within the establishment  concerns the least bad option for the City: whether to face exclusion from the EU market and displacement by Paris or Frankfurt as Europe’s leading financial centre or to remain inside Europe and to take up arms against a sea of Eurozone banking regulations and by opposing end them. That is the question!

So, according to Cameron, Britain will fight on inside Europe but the “arms” will not be particularly effective. The most he has been able to achieve is the right to open discussions regarding legislation which may be offensive to City sensibilities : thanks to the diligence of our European partners, notably the French, he will not have a veto on regulatory legislation. This legislation will undoubtedly be forthcoming as the Eurozone moves towards fiscal and banking union. More specifically, as the specter of bank failures once again raises its head, the Eurozone will activate already existing plans to “bail-in” failing banks thus ending the parasitic relationship between the banks and the state which, everyone, or almost everyone, recognizes, must be ended. Precisely this issue of bail-ins may be a the heart of disagreement within the British financial sector. Whatever the negatives implicit in Brexit, the financial sector would remain in the ascendancy with the state and the public purse in its pocket.( As one British official was quoted: “In the event of a bank failure, it is the UK taxpayer that would have to pay. So we also want to have our say on the regulation,”)  This is win/win for the bankers although lose/lose for everyone else and offers no long term prospects for the British economy or British society in general. It’s safe to assume that more long term thinking is going on and that the need for a new direction has imposed itself, however, reluctantly, on the British ruling class. This new direction is already evident in the Comprehensive Strategic Partnership with China signed up to by the Cameron government and the subsequent regal reception for President XI in London last year. But it one thing for some putative “A” team within elite circles to decide on a new strategic direction but quite another to bring onboard the vast array of lobbies and vested interests which make up the British system. The realization of the need to instigate a peace process in Ireland was a recent example of such a strategic shift and it duly proved itself to be a long and contradictory process.

If the British financial system is to be reinvented on a new model more geared to investment in infrastructure and industry, whether along the lines of a national investment bank as Corbyn proposes or with banks a highly regulated  public utilities as has been mooted recently by others(Goldman Sachs), there will inevitably be winners and losers. The winners, Goldman, the Chinese, perhaps, amongst others, are the pro-European faction, the losers, including Barclays, perhaps, with their unfortunate liaison with Qatar, like Oliver Twist with his begging bowl awaiting more public funds are the  holders of the one way ticket to nowhere which is Brexit.

Of course, nothing of the like is to be heard in the media. But this is just British political life : the political class is as unable to tell the truth as the British people is to hear it. Cameron is spinning a tale about a proud people standing up for its way of life and winning : a tale not told by an idiot but by a remarkably smooth political operator. He knows that if the British people is to vote “yes” they must do so for the wrong reasons. He has been able to take advantage of the great ignorance in this country regarding European affairs, long cultivated in that same media, to sell the idea of a special status for Britain. This really is sleight of hand. Since the Euro crisis around 2011 ( remember!-  when the euro, under attack from the very hedge funds that are now financing Brexit, was about to sink for ever) European policy and construction has centred around the Eurozone and the EU itself has been relegated to secondary status. This will become more evident in the coming years as Eurozone integration gathers pace. We are , therefore, already on the periphery and that is the basis of our new status that has just been ratified. But this special status does not extend to the right to veto developments within the european financial sector which must inevitably rebound on the City itself. As one French MEP,Sylvie Goulard, put it “If there are no common rules on the internal market in financial services, then there is no internal market” The City as we have known it is coming to an end and speeding that process along is the best possible reason to vote “yes” to stay in the EU.

2 Responses to “Cameron spins the City’s demise”

  1. Taco said

    Good article.
    In Gefira we try to do anticipation without having an opinion.
    We try to find the events that determined our future.
    This article fits in this concept. If we can share content that would be great.

  2. seumasach said

    Thank you Taco- that sounds like a good idea!

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