Sailing away from the EU could be a boon for City, says Icap chief Spencer

The City could actually thrive if the UK were forced to pull out of the European Union, according to Michael Spencer, chief executive of Icap, one of the world’s biggest broking firms.

Spencer, a former treasurer of the Conservative Party, made it clear that he would overwhelmingly prefer the UK to succeed in renegotiating its position in Europe — but it should pull out if that were to prove impossible.

“I do think that the UK and the City could thrive outside the EU,” he said. “If we pulled out, we could quickly take away a lot of the regulatory burden which is imposed on the City. There would not be an exodus of business, an exodus of banks or an exodus of staff.”

Spencer, who created what was then Intercapital in 1986, says he believes David Cameron is right to have given renegotiation such high importance.

He said: “A new deal would be of overwhelming benefit for the whole of the EU — not just the UK. I don’t believe there should be any plea bargaining. The UK is actually a net importer from, not an exporter to, Europe and I don’t see the EU introducing trade barriers if we were to leave. I don’t think the idea of the UK leaving Europe would be anything like as disastrous as some of the doomsters like to suggest.”

Spencer was one of the leading lights in encouraging the Government to fight against a financial transaction tax across the EU. He said: “I think, and most sincerely hope, that that is well and truly on the back burner.”

But he can cite a long list of serious and petty restrictions he feels harms British financial services companies.

“There are a lot of small issues which are antipathetic and can be very annoying or appear very annoying from a UK perspective,” he said.

“Many of these issues should be repatriated, including how many lady directors I have on my board. Not that I’m against women directors — we have a very good one — but that is something which should be up to companies, not the EU, to decide.

“The bigger issues are immigration and restrictions on flexible labour markets. The EU should not be interfering in every part of every country’s economy. The reforms of the European project should be about creating a proper single market across the EU rather than pressure and prioritisation on greater political union. There are some positive signs from [German chancellor] Angela Merkel that Germany is open to some of the right reforms.”

Icap, with annual revenues of some £1.5 billion, has offices in 32 countries employing just under 5000 people.

Spencer believes that London is still a magnet for many of the top people in finance. “London remains a major attraction when it comes to recruiting people,” he said.

“I hope that the Conservatives win the next election outright, and that will help to make it even more attractive. Free of the constraints of the Coalition, they could pursue more Conservative policies including tackling personal taxes, which remain too high.” Spencer does not think an exit from Europe would particularly damage the City’s ability to do business.

“We would still be the world’s sixth-largest economy. Countries such as South Korea and Canada do perfectly without huge trading blocs,” he said.

“Similarly, many of the world’s biggest financial centres — such as Switzerland, Singapore and Hong Kong — do not have huge domestic economies behind them.”