The euro zone is facing its darkest hour but will emerge more competitive than in the past, the chief executive of the London Stock Exchange told CNBC on Friday, though he noted that smaller businesses are very important to Europe’s recovery.
Xavier Rolet said he was increasingly confident that Europe is now facing the worst of the crisis, adding that he was cautiously optimistic about the future.
He also argued that small- and medium-sized businesses presented the solution to Europe’s current economic problems, predicting that proposals for a financial transaction tax (FTT) as suggested by the previous French government under Nicolas Sarkozy would not be implemented across Europe.
“First of all, the FTT is not a unanimous project. I think politicians who have promoted it understand its detrimental impact on liquidity and particularly the cost of capital, because the government bond market is meant to be exempt from the FTT,” Rolet told CNBC.
“So they do understand the negative impact on the cost of financing particularly on companies.”
He added: “We believe that [small- and medium-sized businesses] deserve a break. They need help in order to raise capital. There are 23 million [small- and medium-sized businesses] in Europe and 22.7 million unemployed workers so you can do the math. We need to help them, so we do not believe it is the right time for FTT. But I’m confident it will not be a pan European project.“
Rolet launched a broadside at European regulators, suggesting the derivatives market in Europe had operated as a “duopoly for many years” and that the LSE had been prevented from competing.
“The whole regulatory environment is changing, but the players are changing, and we now have an opportunity to expand into high growth areas, particularly the clearing world and the intellectual property and we are very excited about that.”