[A-List] UK eurozone membership: banks

[Michael Keaney]

Banks bemoan euro dither

Mark Milner
Tuesday December 3, 2002
The Guardian

British-based banks want an end to uncertainty over membership of the single
currency but a decision to stay out or join is not seen as critical to
London's position as an international financial centre, according to a
survey yesterday.

Retail banks would face costs of some £300m over a period of three years if
Britain were to join the eurozone. But they are more concerned that if
Britain did join they would not be allowed sufficient time for the
changeover, according to a study by the Sir John Cass business school
commissioned by the Corporation of London.

Investment banks, especially those based in Europe, believe that London
could benefit from a decision to switch to the euro, and some are concerned
that staying out might pose a threat to the City's international status.

But, says Sir John Cass's report: "Overall there is no concern that the City
will be significantly disadvantaged if the UK were to remain outside the
eurozone."

According to the report, the issue of British membership of the eurozone is
seen as less important as a choice of location than access to skilled staff
and labour market flexibility - where the City scores well - and costs,
where it does not.

"There are several strategic concerns relating to London as a centre of
financial activity but UK eurozone membership is way down the list,"
according to Professor Alec Chrystal at the Sir John Cass business school.
Dame Judith Mayhew, chairman of the Corporation of London's policy and
resources committee, noted that while banks were not overly concerned about
which way the issue was decided, "they would like an end to the current
uncertainty".

Although the banking community is ambivalent about the pros and cons of
British membership, it is keen to be seen to avoid taking sides on the
issue.

According to Prof Chrystal, foreign-owned banks are concerned not to be seen
to be trying to influence the debate in Britain, while British-owned banks
are worried that whatever they decided would be certain to upset at least
some of their customers.