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Europe debate is crucial for financial services

03/10/13

The ongoing debate over the UK's place in Europe could have a huge bearing on the financial services industry, with Conservative MPs planning to make a fresh bid for British independence from the EU.

Executives from Goldmans Sachs told politicians that London would see an exodus of international banks if this plan comes to fruition, reports the Financial Times.

A major factor in the capital's emergence as a global financial hub has been its close links with European neighbours, which could be lost or damaged in a reshuffle of the country's position in the EU.

The City of London Corporation, which governs the Square Mile, admitted that the debate over Europe has "magnified uncertainty" in an industry which is still reeling from the events of 2008 and the continued media criticism it faces.

One example of the close links between Britain and Europe is that the UK's financial services trade surplus with the EU was £16.6 billion in 2012 - more than a third of the country's total finance sector surplus.

Mark Boleat, policy chairman at the corporation, suggested that the majority of firms in the City would prefer to stay in Europe for a host of different reasons.

Didier Duret, chief investment officer of ABN Amro private banking, added that the UK would become less able to influence EU policy in favour of business if it becomes an outsider.

"It would mean the EU would be more influenced by the more interventionist powers such as the French and the Germans," predicted Mr Duret.

However, other experts polled by the Financial Times were more relaxed, arguing that London's links with the US and Japan would continue to make it a financial hub even without its European counterparts.

"Does it matter if we leave the EU? It would only have a marginal difference because we speak English and everyone and everything is here," said the head of equity at one of the world’s biggest fund management groups.

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