City of London 'strangled by EU red tape, and Government must intervene'
The Government must act now to prevent the City of London from being held back by "onerous" EU regulation, according to an economic think-tank.
The Adam Smith Institute said envious European countries are deliberately out to restrict jobs and growth in the UK's most important industry.
The UK should call for simple and fair regulations that apply across the world instead of getting tied up in knots by regulations inspired by the competition in Paris and Frankfurt, it said.
That would create a world market in which London could excel, rather than seeing business move to low-cost centres in Asia.
Regulation expert Tim Ambler, the author of the report, said the UK should campaign for global rules that promote competition and innovation rather than weighing down Europe and the UK with unnecessary costs.
"Those rules should focus on protecting consumers and promoting trade, not creating larger and larger rule-books that nobody can possibly read," he said.
Currently, there are thousands of pages of EU regulation, but Mr Ambler said these could be replaced by just eight key principles to promote honest trading.
"Regulation is already strangling the financial sector and there are just two ways to correct this," he continued.
"One is for the UK unilaterally to cut out the red tape and hope others will follow. But a better way is to recognise that finance is a global industry, needing global regulation, and for the UK to campaign to make this regulation as light as is needed to protect customers."
As only one new retail bank has been set up in the UK in the past 130 years, this shows that the complexity and cost of financial regulation now seriously discourages competition in Britain, the institute argues.
It called for the new City regulator, the Financial Conduct Authority, to be "strangled at birth", with the Bank of England regulating providers and the Financial Ombudsman Service protecting customers.
Dr Eamonn Butler, director of the institute, added: "Not content with drowning our main industry in red tape, we are letting our competitors in Paris and Frankfurt pile on more. The UK Government needs to come out, fists flailing, to campaign for effective but low-cost regulation across the world, rather than allowing us to become an uncompetitive backwater."
Copyright Press Association 2013