The past few weeks have seen the idea of a dedicated European Commissioner for Financial Services resurface one again. At present, financial services form part of the wide-ranging Internal Market and Services portfolio. While the prospect inevitably brings its own pros and cons, on balance it has the potential to be a good development for Britain.
As ever, whether such a move ultimately benefits British interests depends very much on how the UK government makes its case. Some comments on the impact of a Financial Services Commissioner:
1. Britain wouldn’t get the new job
Fairly evidently, the UK would not get this portfolio in the incoming European Commission or any foreseeable Commission. The City of London is too dominant in EU financial services for Britain to have a hope. To the rest of the world, Commission impartiality notwithstanding, it would seem too much a glorified form of self-regulation. In order to be credible, the role would have to go to a candidate from another Member State, likely one without a significant financial service sector and probably from the European North.
2. The UK would stand a better chance of securing the internal market post
In these circumstances, Britain would be much more likely to get the internal market portfolio. The Prime Minister has indicated this to be his top choice, and it fits with the UK’s current focus in Europe. Without financial services the internal market brief would carry a less hefty mandate, making it more acceptable to the rest of the Member States for Britain’s Commissioner to take the job. If the UK aims to leverage its European position both to boost its own economy and to provide some compelling reasons to stay in the EU, then it truly needs one of these big economic portfolios. Creating a Financial Services Commissioner would also add another top job to go around, making it easier for Britain’s partners to go home happy.
3. The internal market commissioner could focus on the internal market
If Britain did get the new and improved internal market portfolio, Jonathan Hill (presuming he’s confirmed) would be in a position to focus exclusively on improving the internal market – digital and energy are some of the important areas needing attention. In contrast, the current Internal Market Commissioner, Michel Barnier, has spent the vast majority of his time in post dealing with financial services and the banking union, thus by necessity largely ignoring the single market. With this burden lifted, Lord Hill would have much more space to work on deepening the internal market and producing tangible economic results for Britain and Europe.
4. Keeping internal market and financial services together won’t save the non-euros
The primary criticism in Britain against a Financial Services Commissioner, including from the BBA, is that it would precipitate a Eurozone bias in financial regulation. However, such a tilt is possible with or without a division of roles and it’s relatively improbable in the short to medium term. Having an overburdened Internal Market Commissioner won’t solve much of anything. In other words, attempting to keep a lid on financial services regulation by making sure the relevant Commission policy chief is saddled with as much work as possible, and thus less able to pursue something unwelcome, is not a winning strategy. Balancing the interests of the euros and non-euros is a long term issue and Britain will need to spend a significant amount of time and resources working on it. Of course, success or failure in preserving the influence of the inevitable non-euro minority depends on building strong relationships with European partners.
5. Commissioners are some voices among many in EU debates
Lots of factors are always at play in European politics. While Commissioners’ portfolios matter, their standing with the Commission President and ability to work with colleagues are also significant. Moreover, in terms of legislation, the Member States in the Council and the European Parliament have key roles as well. At the end of the day, formal roles and responsibilities are always supplemented by the informal realities of EU bargaining. Shuffling the Commission portfolios will only make a substantial impact where competent individuals take on the new roles. Whatever the policy briefs in the incoming Commission, plenty of other inputs will determine how well and how fairly the Commission operates.
Britain doesn’t have the final call on the Commission portfolios or their attribution. That task falls to the Commission President-elect, with of course a role for the Council and Parliament. Nevertheless the UK has some say, and it should use it well. Best advice: Britain should be a constructive partner. The UK government won’t get everything it wants, but being seen to engage positively at European level will pay dividends in terms of results. Britain won’t get the internal market or any other important economic brief through threats, ultimatums or fear. It will only achieve its objectives through dialogue, compromise and partnership.
Shortened link: britainseurope.uk/20140808
How to cite this article:
Salamone, A (2014) ‘A Financial Services Commissioner: Impact for Britain’, Britain’s Europe (Ideas on Europe), 8 August 2014, britainseurope.uk/20140808