City fears march of the populists

Sam Fleming and Alex Barker
Friday, 21 Feb 2014 | 2:33 AM ET

Financial services giants are running a campaign to lobby every single British candidate in May's EU elections, fearing that their influence over the agenda will be damaged as populist parties like Ukip win more seats in the European Parliament.

The European Parliament's powers have grown substantially in recent years and it now produces most of the legislation affecting the Square Mile's interests.

Dr David James Killock| Flickr Open | Getty Images

Bodies representing City firms have sent briefings to all Britain's prospective MEPs vaunting the sector as a "national asset" and highlighting its contribution to jobs.

Further letters will come from key lobby group The City UK before and after voters go to the polls in May, with teach-ins on hot topics offered to successful candidates. The British Bankers' Association sent briefings to aspiring MEPs before Christmas.

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The likely success of the UK Independence party in the election is a source of particular anxiety, said one banker, given that its candidates show little interest in policy making and will displace mainstream British MEPs who do. Some polls suggest Ukip may win the biggest cohort of UK MEPs in May.

The question of how to deal with Ukip is a particularly active one for banks. Some ask whether there is any point discussing policy with a party that,as one lobbyist puts it, takes "perverse" satisfaction in seeing unhelpful legislation pass through the parliament because it believes this will further undermine UK support for EU membership.

Analysis by the FT has shown that Nigel Farage, the party's leader, attended only one of 42 meetings of the fisheries committee, on which he sat for three years. In the parliament Ukip typically misses a third of the votes –double the average.

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A blog posted on the website of the British Bankers' Association last week shines a light on the debate within the industry. Written by Marley Morris, a researcher at Counterpoint, a think-tank, it cites descriptions of Ukip as the "party of no".

As such, it argues it may be better to focus attention on mainstream parties – as well as potentially more moderate eurosceptic movements such as Alternative für Deutschland – as "the best way of handling a potential populist surge".

Ukip politicians on the other hand insist that they want to promote British interests. Roger Helmer, the member for the East Midlands, points to Mr Farage's former job as a metals trader as he insists his party will "do what we can to defend the City".

Adding to the sector's concerns, is the impending departure of a numberof influential mainstream British MEPs, including notably Sharon Bowles, the Liberal Democrat chair of the Economic Affairs Committee.

(Read more: Can Europe's economycope with a Tea Party?)

Lobbyists praise her even-handed approach to complex topics, and the UK is unlikely to clinch the chairmanship of the powerful committee in the next parliament given its role overseeing eurozone matters.

"We are losing quite a degree of experience – voices of deep understanding and knowledge of the sector," said a Brussels lobbyist.

While the current parliament has already seen a tidal wave of financiallegislation, there is more to come when the next one meets.

Several commission initiatives – not least reform to bank structures and regulation offinancial benchmarks – will be unfinished and left in limbo. The files can be droppedor taken up by the new parliament, whose priorities are hard to predict,especially after the arrival of new MEPs from anti-immigration and anti-EU parties.

(Read more: UK election loss may force austerity rethink)

Further undermining the UK's voice in the parliament is prime minister David Cameron's decision to leave the European People's party. This will mean there are no British MEPs in the parliament's main centre-right grouping, which plays a pivotal role on many files. And Conservative MEPs are expected to suffer heavily at the hands of Ukip.

Labour MEPs are in the parliament's main centre-left grouping but have often voted with it against City positions. They backed the Financial Transaction Tax, EU powers to ban short selling, the banker bonus cap and an unsuccessful proposal for a bonus cap on fund managers.

Lobbyists are now anxious to convince new MEPs that the financial sector acts as a catalyst for growth, rather than a vehicle for the self-enrichment of a few bankers in London.

"The industry is held in such low regard that the idea is to get ahead of the curve," said one.

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