Opinion

The City of London Needs Equivalence — With New York

Mervyn King

By Mervyn King

Reasonable people can disagree about whether remaining in or leaving the EU is a good thing. But, as Frost said, there’s little point in giving up the advantages of membership without getting the benefits of leaving.

By Mervyn King

The eminent economist Bob Solow once said his profession “requires three qualities: faith, hope and clarity; and the greatest of these is clarity.” For the past four years the British view of its future trading relationship with the European Union has reflected much more of the first two virtues than the latter. Thankfully, we’re now seeing signs of lucidity. A speech last month by the U.K. trade negotiator, David Frost, was admirably clear on the subject.

Reasonable people can disagree about whether remaining in or leaving the EU is a good thing. But, as Frost said, there’s little point in giving up the advantages of membership without getting the benefits of leaving. The previous U.K. government, under Theresa May, started by arguing that a no-deal Brexit was better than a bad deal and ended up by arguing that a bad deal was better than no deal. She was prepared to sacrifice the good things about being an EU member without reaping the dividends of separating.

As we move into the next stage of Brussels negotiations, it’s important to recognize that while a free trade agreement is desirable it can’t mean having to follow rules and regulations that are created and monitored by the EU, with no British input. I’d also argue that it’s far more important for the City of London to be “aligned” with the U.S. than it is with Europe.

Read the full Bloomberg article.

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Lord Mervyn King is the Alan Greenspan Professor of Economics and a professor of Economics and Law, a joint appointment with New York University School of Law.