A former MEP has hit back after Brexit was blamed for the latest data revealing London‘s stock market is now £204bn smaller than Paris. A weak performance by the FTSE 100 saw London’s market fall behind in recent months.
Between November and this week, its French counterpart has jumped by more than a tenth to $3.1 trillion, according to Bloomberg data.
The figures were blamed on Brexit by those who believe the UK’s decision to leave the EU has forced companies to move out of the City of London in favour of Paris and New York.
Economists have been pointing out that the gap between the two markets has been narrowing since the Brexit vote in 2016.
Michael Saunders, former member of the Bank of England Committee responsible for setting interest rates, said on Monday that were it not for Brexit, “we probably wouldn’t be talking about an austerity budget this week”.
However, former Brexit Party MEP Ben Habib, hit back saying it was the UK Government’s failure to make the most of Brexit advantages that is at fault.
He told Express.co.uk: “London’s stock market is not slipping because of Brexit. It is slipping because the Government has not taken advantage of Brexit.
“The City remains highly constrained by pre-Brexit regulations. The Edinburgh Reforms and the ditching of Solvency 2 mooted by Jeremy Hunt have yet to be implemented.”
It comes after Public Policy Editor at the Financial Times, Peter Foster, commented on the impact of Brexit on the British economy.
He said: “Whatever the datasets say (and they’re murky as Sophie Hale said) it seems implausible, given all the conversations I’ve had with manufacturers, chemicals, pharma companies that Brexit had no impact on UK exports to EU.
“Hale talked about ONS GDP ‘balancing adjustments’ as one possible explanation…like I say, I’m not an economist, but whatever the spreadsheet numbers say, there are a lot of flesh and blood people and Bix Group surveys that don’t square with that. They can’t all be imagining it.”
But Mr Habib said this had “nothing” to do with Brexit.
He added: “At the heart of the problem facing London is a series of capital adequacy and other regulations that militate against UK investors investing in stocks, shares and other ‘riskier’ assets.
“Under these regulations, put in place after the financial crisis in 2008, banks, pension funds and insurance companies have been encouraged to invest in ‘low risk’ government bonds. This was no accident. With ballooning government debt, it suited HMG to push investors in this direction. But it has hollowed out investment in corporate UK, with a concomitant impact on our stock exchanges and the wider economy.
“Pension funds, for example, used to invest some 50 percent to 60 percent of their assets in shares listed on the London Stock Exchange. Now they only invest some 5 percent to 6 percent. Instead, they have favoured buying gilts.
“It is for this reason that companies are skipping London and listing in New York. It is also significantly for this reason that, when interests rose and the value of government bonds fell, our pension schemes got into such trouble.
“The pursuit of socialist government policies, a bloated state funded by high borrowings and taxation, embedded with burdensome regulations is killing capitalism in the UK.
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“This is nothing to do with Brexit. It is everything to do with a socialist Conservative Government.”
The FTSE 100 dropped on Thursday after the Bank of England and Federal Reserve both announced interest rate increases.
The central banks increased rates by 0.25 percentage points despite concerns over pressure on the banking sector.
Sentiment was weak across Europe at the start of trading, driven by the Federal Reserve’s continued aggression to stave off inflation and held firm after the Bank followed suit, although trading became more settled later in the day.
London’s top index moved 0.89 percent, or 68.24 points, lower to finish at 7,499.6.
The FTSE was partly lower due to the strength of sterling, which was boosted by confirmation of higher rates and a drop in the dollar.
The pound was up 0.5 percent to 1.232 US dollars, and rose by 0.12 percent to 1.131 euros at market close in London.