It’s beginning to look that way. Recent remarks from the governor of the Bank of France will stoke the fires of Euroskeptics in the UK who want out:
“Most of the euro business should be done inside the euro area. It’s linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency.”
He added: “We’re not against some business being done in London, but the bulk of the business should be under our control. That’s the consequence of the choice by the UK to remain outside the euro area.”
The FT says these comments augur a particularly anxious time ahead for the UK:
The intervention comes at the start of a potentially fraught week of EU diplomacy, where London will again demand financial services safeguards against the political clout of a more integrated eurozone
EU ministers will meet in Brussels on Tuesday to broker a deal on giving the ECB sweeping powers to supervise banks, in the first leg of a banking union that will not include Britain.
As the FT report notes, London has been Europe’s financial nerve center since the creation of the euro and handles more global foreign exchange for the single currency than the rest of the Eurozone combined.
Germany wants the UK to remain a part of Europe, partly to help balance what would otherwise be an overwhelming political advantage for Latin, Mediterranean, and Balkan countries, all of whom see Berlin as a cow to be milked. France, however, has reason to believe that a UK exit would strengthen its position in the bloc and cement the Franco-German partnership. Without the UK it would be much easier for France and friends to attack the parts of the single market they don’t like, push the EU away from an Atlanticist orientation, and adopt a softer currency system. Plus, reducing London’s role as Europe’s financial center would be very good business for Paris.
There are plenty of people in Germany, too, who would like to take the financial markets business away from London and bring it onto the Continent. Thus French attacks on London’s position get more support in Germany than other moves intended to drive the British out. But if Germany wants to keep the UK in the club, reassuring the City of London about its future as Europe’s financial center would be one way to do it.