Rehn says UK banks are not shielded from regulation
Commissioner launches six-pack of financial regulation, and says he ‘deeply regrets’ David Cameron’s decision at last week’s summit.
Olli Rehn, the European commissioner for economic and monetary affairs, said today that the UK would not succeed in shielding “bankers and the City” from further European Union financial regulation.
Rehn was speaking as he previewed tomorrow’s entering-into-force of the ‘six-pack’ of legislative measures aimed at strengthening fiscal discipline.
He said that he “deeply regretted” the UK’s refusal at the European Council on Friday (9 December) to sign up to treaty change to introduce even greater fiscal rules, known as the ‘fiscal compact’.
“I regret it as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives,” Rehn said during a press conference this afternoon (12 December).
The commissioner said that he wanted “a strong and constructive Britain in Europe” that was “at the centre of Europe and not on the sidelines”.
The refusal of David Cameron, the British prime minister, to sign up to the new rules came after he failed to persuade other EU leaders to guarantee that the UK’s financial services sector would be protected from legislation that he did not want.
The British government has been particularly unhappy about a swathe of financial services legislation emanating from the European Commission, including tough rules on derivatives trading and bank capital, and proposals for a financial transaction tax. The government fears that London could lose its status as Europe’s financial services capital.
However, Rehn had a warning for Cameron. “If this move was intended to prevent bankers and financial corporations of the City [of London] from being regulated, that’s not going to happen,” he said.
“We must all draw the lessons from the ongoing crisis and help to solve it. And this goes for the financial sector as well.”
Legal uncertainty
With the UK vetoing a change to the EU’s treaties, leaders agreed on Friday to create a separate inter-governmental treaty to implement the new rules.
Officials admit there is still a degree of legal uncertainty over which rules need a new treaty and how the EU’s institutions will be used.
Rehn said that most of the rules could be implemented without a new treaty. “Our legal assessment is that by far the vast majority of the measures decided on Friday can be implemented through secondary legislation,” he said.
“I am happy that the role of the [EU’s] institutions was recognised and reinforced,” Rehn said. “The speculation of some media that the treaty is not enforceable is unfounded. The result we got at the summit was better than some suggested – bold, effective and legally viable.”
Rehn denied that the rules agreed at the summit would not add much more to the six-pack already agreed by all 27 EU member states and the European Parliament.
As part of the six-pack, fines will be imposed on eurozone member states that do not take adequate action to correct excessive deficits. If a country does not take corrective action the financial sanction will be applied after a Commission recommendation, unless it is blocked by a qualified majority of EU member states.
There are also new rules for excessive debt and medium-term financial sustainability goals, with fines for countries that waver from these “preventative” measures.