Hedge fund laws threaten London’s future as financial hub, Boris warns
Boris Johnson and George Osborne today warned the Government that London's future as an international financial centre was in danger from new EU red tape.
The Mayor and shadow chancellor told Business Secretary Lord Mandelson that the tighter regulation proposed for hedge funds would drive London investors to cities such as New York, Singapore, Hong Kong and Geneva.
Mr Johnson said he was so concerned about the changes he had sought an urgent meeting to personally lobby EU Commissioners.
In separate speeches to an economic recovery conference in London, the senior Tories blamed government ministers for failing to protect the capital's interests in allowing ill-conceived legislation be formulated that would strangle its financial sector.
They said the new supervision regime for hedge funds, private equity and venture capital would be stricter than the rest of the world and weaken Europe's competitive position. London would be worst hit because it was home to 80 per cent of European hedge funds.
They argued tough regulation was needed to prevent another financial crisis, but it had to be set at a global level to ensure a level playing field.
Mr Johnson said the Government needed to work harder to protect London's financial industry, arguing that German ministers would automatically challenge any EU directive that threatened its car industry and the Swedish government would do the same for any rules that hampered the flat-pack furniture sector.
Mr Osborne said: "The Government has been totally wrong footed on these issues.
"The Chancellor and the Treasury have been almost entirely absent from the debate in Brussels, and now they are rushing to catch up. They have been asleep on the job. They have let the City down and the British economy down."
He promised that a Conservative government would engage more actively in shaping the European regulatory agenda.
Lord Mandelson acknowledged that ministers had "to work hard to get the regulation right" for a stable, competitive UK financial services sector.
But he argued that looser rules were not the answer and called for a "culture change" in boardrooms that would involve "a bit more old fashioned banking".
UKIP pointed out Tory MEPs voted for the new EU directive last year, while they were the only party that voted against it. UKIP MEP and former mayoral candidate Gerard Batten said: "It's great that Boris is supporting the City in this way but a shame the Tories didn't when they had the chance."
