On 13th June 2012 the Daily Express made a gamble that the EU would be more unpopular with its readership than the United Kingdom’s banking sector, when the newspaper published an article by Macer Hall on its website entitled: “NOW EU WANTS TO GRAB CONTROL OF BRITISH BANKS”. This article can be seen at http://www.express.co.uk/posts/view/326238/Now-EU-wants-to-grab-control-of-British-banks/ . The article was critical of proposed new powers that would allow the EU to regulate the banks, as well as being critical of what it described as “a swingeing new financial tax”. This article was not just a vitriolic criticism of the EU, but also a criticism of creating any kind of mechanism that would effectively regulate Britain’s financial sector.
When the article was published on 13th June the editorial staff at the Daily Express could not have predicted the extent of the IT systems failure at RBS and its subsidiary banks NatWest and Ulster Bank, or the revelations of the Libor fixing fraud at Barclays Bank and other leading banks. However the newspaper would have been aware of the PPI mis-selling scandal – which is likely to have affected many of its readers – as well as the financial crisis which became first apparent in 2007 around the time the Northern Rock bank got itself into trouble. The Daily Express was therefore arrogant to assume that its readership would not want to see effective regulation of the UK’s banking sector, even if that regulation was to come from Europe.
The article did not explain to its readers why it is necessary for the EU to regulate banks within EU Member States – the reason for more stringent regulation is because there has been a massive failure of the global financial system, as a result of corruption, greed, and incompetence by some of the individuals who run the financial institutions. Although the UK is not in the Eurozone, it is still suffering from the same problems as other EU Member States in that tax payers money has been used to bail out failed banks, which has exacerbated the sovereign debt crisis, leading to a wider economic crisis. To break this cycle the EU must have more control over the banks, which should include sanctions such as the power to prosecute banking officials involved in fraud.
The Daily Express’s article quoted the Eurosceptic Tory MP, Peter Bone as saying: “The political elite of Europe are completely barking and out of touch with ordinary citizens. The sooner the euro collapses and the European Union breaks up the better.”
From this remark Mr Bone shows himself to be both barking and out of touch with ordinary citizens, because if the euro collapsed and the European Union broke up, the EU’s internal market would also break up, creating even more mass unemployment which in turn would stoke up old nationalist hatreds. This in itself would kill Britain’s export market to Europe and create even more unemployment at home. The break up of the EU could also lead to another world war emanating from Europe.
The Daily Express’s article did not give its readers any specific details of what it described as the “swingeing new financial tax”, perhaps because if its readers were better informed they might actually support the tax. This tax is probably the financial transaction tax (FTT) which has also been called the Robin Hood Tax. The European Commission proposed this tax on 28th September 2011. In a press release of that day ref: IP/11/1085, the European Commission gave its reason for the tax as follows:
First, to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States. The financial sector played a role in the origins of the economic crisis. Governments and European citizens at large have borne the cost of massive taxpayer-funded bailouts to support the financial sector. Furthermore, the sector is currently under-taxed by comparison to other sectors. The proposal would generate significant additional tax revenue from the financial sector to contribute to public finances.
Second, a coordinated framework at EU level would help to strengthen the EU single market. Today, 10 Member States have a form of a financial transaction tax in place. The proposal would introduce new minimum tax rates and harmonise different existing taxes on financial transactions in the EU.. This will help to reduce competitive distortions in the single market, discourage risky trading activities and complement regulatory measures aimed at avoiding future crises. The financial transaction tax at EU level would strengthen the EU’s position to promote common rules for the introduction of such a tax at global level, notably through the G20.
The FTT which is not applicable to pension funds has rates of 0.1% for shares and bonds, and 0.01% for derivatives. The tax was approved by the European Parliament on 23rd May 2012.
The Daily Express might want its readers to believe that the EU is costly for British citizens, but if people do a little research for themselves they might find that the institutions of the EU are actually on the citizens’ side. For many people the pain of being ripped off by the banks, would have focused their minds on the shortcomings of the Daily Express’s Eurosceptic editorial policy.
©Jolyon Gumbrell 2012