So we have both sides: Now let’s talk EU Referendum

Ehtesham Khurshid of Warwick Business School examines what it means for the city

Recently, a new cross party campaign that calls for Britain’s exit from the EU was launched. Ever since its inception, the campaign has been receiving support from prominent businessmen, politicians and a
significant section of the public.
From the financial industry, the most high profile donor of this campaign is Crispin Odey, one of London’s most prominent hedge fund managers. Mr Odey’s decision is somewhat reflective of the general mood of hedge funds across the UK who would mostly want to support this campaign, though silently if not openly. In fact, Hedge Funds, despite being traditional backers of Tories, have more than often expressed their exasperation over the intense post crisis regulations that the EU adopted after the Global Financial Crisis. Hedge Fund managers across the board believe that the EU’s Alternative Investment Fund Managers Directive imposes additional and unnecessary costs on them, thereby significantly hampering their global competitiveness. However, the news of the Hedge Fund industry backing the Vote Leave campaign has already sent alarm bells ringing in Mr Cameron’s government. To counter the financial prowess of the aforementioned campaign, several top businessmen like Lord Sainsbury have pledged support to the Vote In Campaign that has recently been launched.

The interesting phenomenon out of all this is that it is potentially going to divide opinions in the City of London.  Here is when Investment Banks come into the picture. Most of these banks today feel that London’s prominence as a global financial centre lies in its ability to tap into the common European market and attract the best of talent fro
m across Europe. In the eventuality of a Brexit, most experts feel that Investment Banks are likely to be hit most considering they employ many European citizens and most of their European Businesses are operated from London. Time is thus running out for Mr Cameron and his government to renegotiate Britain’s relationship with Brussels and prevent the EU from its first major casualty.