Where is our patriotism for British financial services?

The City could do with some of our Olympic spirit.

Whilst Team GB excels and its athletes epitomise the best of Britain and continue to be a shining example of the rewards achievable through dedication, honest hard work and, passion; many aspects of the City continue to shame us.  Having said this, the recent Standard Chartered furore appears unlike many of the recent financial scandals.  It can be construed as an opportunistic, badly concealed political attack by a New York financial regulator trying to profit from discrediting a bank run from London to the benefit of Wall Street institutions.

Whilst the Governor of the Bank of England has recently said as much, the reality is that the New York regulators are reaping the rewards of poor regulation in the UK. Had the Bank of England and the FSA not managed to be so totally inept in the Barclays et al LIBOR scandal, it would not now be open season on attacking any London based institution, whether they deserve it or not.  The Bank of England chose to ignore the eminent advice of the US Federal Reserve which could have been an early alert to the Libor scandal in the first place.

The only way forward has to be to put aside self-interest, look at the longer term picture and resurrect the reputation of the City to reflect the values and ethos central to the Olympic spirit.  We need to fundamentally improve standards here in London to regain the reputation for integrity and quality which we have recently lost. It's not just the other banks that suffer from guilt by association from these scandals but any financial services institution. To the man in the street we are all the same, they do not differentiate. 

The families, trainers, medics and their full support teams have all rallied in support of British Sport but where is the rallying in support of our financial services industry which contributes 10 per cent of our GDP? We are in serious danger of losing our place on the podium when it comes to the world’s winning financial centres.  

I implore those in positions of power and government to step in and ensure that the codes and regulations that govern our financial services industry are fit for purpose and adhered to in word and spirit and that they provide a robust framework to end the shoddy practises eroding the industry’s reputation on the national as well as international stage.  The trade bodies, be they the bankers, insurers, pension providers or fund managers, need to be 'dope' tested and I don't mean dope as in drugs but dope as idiotic! To have professional standards and regulations overseen, as they are in many cases, by trade bodies from the financial services industry is the equivalent to putting the supplier of enhancing drugs in charge of the doping tests. No longer can the regulator be allowed to delegate their responsibilities to self-serving trade bodies.

What is needed is not more regulation but more effective regulation – regulation that is based on fundamental over-riding principles applied consistently, simply and overseen by independent bodies, not self-interested trade groups.  London needs to restore its position in the global league table of financial centres.

Photograph: Getty Images

Gina Miller is the founding partner of SCM Private LLP and spearhead of the True and Fair Campaign. www.trueandfaircampaign.com

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump