According to research by the City of London Corporation, the credit crunch will cause 75,000 jobs losses in the financial services sector across Europe. Where does the blame lie in the midst of this economic turmoil? Well, Europe is at the bottom of it. The report identifies five key factors which will determine the performance of the financial services industry over the next five years: the regulatory environment; the state of the world economy; the evolution of domestic savings; competitive pressures from outside the EU; and changing business models. The report is sensitive on Europe, as they always are, but many analysts are happy to say where the real problems lie.
Stuart Fraser, the City of London’s Chairman of Policy and Resources, appears to realise where the problems begin: “We are particularly concerned about the proposed amendment to the EU Capital Requirements Directive. This change would greatly increase the cost of capital across Europe, with detrimental effects far beyond the financial services industry. Any new legislation should be developed according to the EU’s own principles of Better Regulation, including a reasonable consultation period and a full impact assessment – so far, we have seen neither.” The difficulty within the financial industry in Europe is that the key economic actors have openly chosen to use an unreflexive and irreversible institutional basis for their legislation, vis-a-vis the EU, and now is the time it will dawn upon them that they are not in control of that regulatory environment (or the ability to do anything about the 75,000 jobs losses). The report actually sounds overly-optimistic - I expect a lot worse.
