EU's regulation of City would 'strangle' London, says Mayor Johnson
Boris Johnson, the Mayor of London, said yesterday that European plans to regulate the financial services sector threatened to drive hedge funds out of London and Europe, even though they were "blameless" for the crisis.By Angela Monaghan
Telegraph, 09 Jul 2009
Speaking at a conference in London he said: "It's utterly crazy that we should allow the EU to launch an attack on the City's alternative investment funds. I believe this EU directive is a mistake and against the interests of Europe," he said.
"Hedge funds won't go to Paris or Frankfurt, they'll go to New York or Shanghai. What is good for London is good for the UK and what is good for London is good for Europe."
The Mayor's office said it was estimated that hedge funds contributed about £3bn in tax a year, and employed 35,000 people directly and indirectly in London. Mr Johnson said that the right thing to do would be for regulation at the global level – by the G20 – reflecting financial services' worldwide nature.
That way, he argued, regulation could be formed that worked for London and its competing cities, including New York, Geneva, Hong Kong and Singapore. Otherwise the City of London would be "strangled".
"My greatest worry is that this is just the start of a flood of draft directives that will start to filter out of Brussels," he said.
The Mayor called on Lord Mandelson, the Business Secretary, and the Government to help him to resist. However, Lord Mandelson, who spoke immediately after Mr Johnson, said that it was in Britain's best interests to co-operate with Europe.
"We've got to be involved in the regulation. We won't influence EU policy by cutting ourselves out of Europe. I hope that's a message Boris takes to his colleagues," he said, adding that London must stay alert to competition in the rest of the world and stay ahead of the curve.
He added: "Cultural change in the boardrooms and back offices will need to take place. Old-fashioned banking needs to return to the City."
The Mayor also urged London businesses to double the size of their apprenticeship schemes to ease the impact of rising unemployment.