By Justin Keay
UK and EU relations have always been tense, but their relationship has deteriorated dramatically in recent months.
While headlines have focused on noisy arguments over support for struggling eurozone members or London’s opposition to increasing the EU’s budget, the proposed EU banking union may yet cause the biggest rift.
Home to the EU’s largest financial center, the UK has long objected to plans to take financial supervision out of its hands via the creation of a pan-European supervisor, but has been powerless because it is not a eurozone member. However, Paris and Berlin are determined to press ahead with a banking union as soon as possible.
Vicky Ford, British Conservative member of the European parliament and a former banker, highlights a more pragmatic opposition to EU banking union. She says it is impossible to have a single supervisor without a strong rulebook, and that the EU’s rulebook, as it stands, does not meet global standards. Because current EU legislation is inadequate, the EU shouldn’t be in a hurry, says Ford.
“We need macroprudential regulation to look at different countries. The union must be supervised by a proper set of rules, which at present do not exist,” she says.
Ford argues that negotiations are bedeviled not only by complexity but by protection of national interests, with German banks, for example, reluctant to pool their deposit guarantee funds.
Irritation with Britain’s obstructionist role within the EU seems to have reached new heights. “In the past the EU would have bent over backwards to accommodate the UK: Now the feeling is, ‘Just let them go,’” says Fabien Zuleeg, chief economist at think tank the European Policy Centre, who adds that the UK is “on the way out of Europe.”
Could 2013 be the year London’s patience with Brussels, and vice versa, finally snaps, putting it on the route toward a referendum and, perhaps, an exit?