LONDON May 21 Banning some trading activities
and taxing stock and bond transactions would cut the
contribution of the European Union's financial sector to jobs
and growth significantly, a study published by the City of
London said on Thursday.
The 34-page study conducted by consultancy PwC looked at two
future scenarios, a "supportive" regulatory environment that
allows the sector to grow, and a harsher one that curbs growth.
It said financial services also create jobs beyond the
sector and tougher regulation would lead to 11 million fewer
jobs being generated across the economy by 2030.
Mark Boleat, head of policy at the City of London, the
municipal authority for London's financial district, said the
report was not an attack on regulation but a call for properly
calibrated rules that allow the sector to make money in a
Some of the rules being planned would also make it harder
for the EU to create a capital markets union to help markets
raise more funds for the economy, the study said.
"Policymakers should carefully consider the potential
impacts of new regulatory initiatives such as bank structural
reforms and the financial transaction tax... on the sector's
ability to continue supporting economic growth," the study said.
Next Tuesday the European Parliament will vote on a draft EU
law that could ban so-called proprietary trading at banks or
where bets on market moves are taken using the bank's own money.
Banks say it is difficult to distinguish prop trading from
market-making or being the other side of a stock or bond trade
for companies and investors, an essential role for oiling the
wheels of the economy.
A group of euro zone countries have pledged to tax stock,
bond and derivatives market transactions from 2016 though
technical difficulties have delayed the project.
The study said Europe's financial services sector currently
employs 6.4 million people and generates 731 billion euros
($814 billion) in gross value added.
($1 = 0.8981 euros)
(Reporting by Huw Jones; Editing by Keith Weir)