EU exit could wreck UK financial capital, says City lobby group

Sun Apr 27, 2014 7:18pm EDT
 
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By Guy Faulconbridge

LONDON (Reuters) - A British exit from the European Union could wreck London's position as the only financial center to rival New York and isolate the country's economy, research ordered by a lobby group for banks and money managers showed.

Prime Minister David Cameron has promised to renegotiate the terms of Britain's EU membership and hold an "in-out" referendum by the end of 2017 if his Conservatives win a 2015 national election.

But many of the most powerful banks, insurers and money managers in the City of London are increasingly concerned that Cameron's gamble could allow the country's $2.5 trillion economy, the world's sixth largest, to slip out of the EU.

TheCityUK, whose members include asset managers, banks, insurance and accountancy firms, warned that Britain outside the EU would be shorn of influence, less attractive to investors and vulnerable to regulations over which London had no influence.

"This is yet more powerful evidence that the UK pulling out of the EU is the very last thing our country needs. It will kill our hard earned recovery ... We will be left isolated in the margins and our future prosperity will be limited for generations," Chief Secretary to the Treasury Danny Alexander will say in a speech on Monday, according to advance extracts.

"This rigorous and in depth work clearly shows that leaving the EU will lead to higher prices, higher unemployment, lower growth and lower real wages," Alexander, a member of pro-EU junior coalition party the Liberal Democrats, will say.

London dominates the $5-trillion-a-day foreign exchange market, trading twice as many dollars as the United States and more than twice as many euros as the entire euro zone, according to the lobby group.

"Continued EU membership is essential to this country's economic wellbeing," said Gerry Grimstone, Chairman of TheCityUK group. "Our research clearly shows that leaving the EU would seriously damage economic growth and jobs in the UK."   Continued...

 
Smog surrounds the Canary Wharf financial district in London April 3, 2014. REUTERS/Suzanne Plunkett