(Reuters) - Britain should build closer ties with the European Union and devote more resources to Brussels to influence financial market reform and benefit the economy, the country’s leading banks said.
The British Bankers’ Association (BBA) weighed into the debate over Britain’s role in Europe on Wednesday, adding its voice to those of other businesses that favour Britain continuing its membership of the 28-member trading bloc.
Prime Minister David Cameron has promised voters he would renegotiate the terms of Britain’s EU membership before holding an in-out referendum by 2017 if his ruling Conservatives win elections due next year. Chancellor George Osborne recently warned the EU it must reform if it wants Britain to remain a member.
“Given the significance of financial services to the UK and the degree to which legislation is set at an EU level, there is an overwhelming case for the UK to devote further resource and expertise in engaging in the European process to increase the level of influence in priority areas,” the BBA said in a submission to a UK Treasury review into the division of powers between London and Brussels.
The BBA said membership of the EU enhanced Britain’s ability to influence international negotiations.
But the European Commission needed to ensure plans for a euro zone banking union did not mean the euro area became “a market within a market,” the BBA warned.
It said the single EU market was a significant factor in London’s success as Europe’s financial hub and therefore of considerable value to the economy.
U.S. bank Citigroup, which has a big presence in London, also warned against Britain opting out of the EU and said such a move could hurt the economy and reduce investment from international companies.
Jim Cowles, Citi chief executive officer for Europe, Middle East and Africa, told the Financial Times there was “mounting concern” among clients about their ability to use Britain as a regional hub if the country exits the EU.
“It is not that international companies will stop investing in Britain, but their investment just will not be at the scale we have become accustomed to,” Cowles told the newspaper. Citi confirmed the comments were accurate.
European aerospace group Airbus, one of Britain’s largest employers, on Tuesday voiced concerns over the possibility of the country leaving the EU, saying the benefits of an alternative economic model needed to be proven.
The London-based Centre for European Reform (CER) predicted last week that Britain would struggle to maintain trade with other EU member states - now 54 percent of goods trade - if it left the bloc.
Reporting by Aashika Jain in Bangalore and Steve Slater in London; Editing by Erica Billingham