London, Europe both lose if Brexit wins: Jonathan Hill

Nine days before referendum, top British political figure in Brussels calls Brexit ‘bad’ for economy, financial stability and single market.

A Brexit would deal a severe blow to Europe’s efforts to deepen its single market, revive its economy, and reform its bank-heavy financial system, warned Jonathan Hill, the European commissioner for financial services.

In a wide-ranging interview with POLITICO on Monday, the most senior British political figure in Brussels launched a final attempt to persuade his fellow Britons to choose Europe in the historic referendum on June 23.

But he also painted a bleak picture of the aftermath of a Brexit for Europe.

Hill, who leads the Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), said a British exit from the European Union would be a lose-lose situation for both his country and Europe. An EU without Britain, he argued, would be a place with lower economic growth and more fragmented capital markets struggling to foster employment and entrepreneurship.

‘Bad, bad, bad’

“If it is the case that Britain is out, it’s bad for Britain, it’s bad for London,” Hill said in his spacious office in the heart of the EU quarter, dotted with classic novels and maritime paintings.

“I think it’s bad for the development of the single market in financial services, I think it’s bad for the European economy. I think it’s bad for financial stability.”

The commissioner’s intervention comes amid the last few days of a frenzied referendum campaign, marked by a late surge for the Brexit camp in the polls and ever-more strident attempts by the two campaigns to sway the sizable minority of voters who haven’t made up their minds.

With just nine days to go before the vote, the latest poll published on Monday by the Guardian showed Leave with a six-point lead over Remain, once the undecided have been excluded. The cohort of don’t-knows has been shrinking, but it is still around 6 percent.

Hill, a veteran Conservative Party operative who was little known outside the U.K. when he joined the Commission in 2014, said he was not a “starry-eyed” European enthusiast. But he argued that Britain needs Europe’s vast market, while Europe needs Britain’s economic expertise and huge financial services industry.

“Even if you think that over a period of time Paris could become a new London for some aspects of capital markets, all these things are going to take time,” Hill said, confounding the views of those who believe Paris or Frankfurt could quickly step into the financial services breach left by London. ”That process is going to cause uncertainty and damage investment, and slow down the recovery that everyone wants.”

Specifically, Hill said the Capital Markets Union — DG FISMA’s flagship project to create pan-European markets for companies’ funding and thereby reduce their reliance on bank loans — would be left severely wounded by a Brexit.

“Building a single market for capital markets without the biggest player in the capital markets clearly changes the dynamic,” he said. “It would be less likely to move forward as fast as it otherwise might.”

‘Scar tissue’

Hill, who has been campaigning in Britain through speeches and media appearances, issued a veiled criticism of businesses that have refrained from entering the referendum fray. Some British companies, like HSBC, have said they would move some of their operations and jobs abroad should Britain leave. But many have stayed quiet, arguing they didn’t want to mix business and politics.

“If you think that as a consequence of leaving you might end up moving some of your operations to mainland Europe or shrinking your operations, then I think you do have a responsibility to your workforce to tell them,” the commissioner said. “The idea of on the 24th … that you say, ‘oh by the way, I forgot to tell you but we’re now moving to Paris,’ it’s not great from an employer point of view, it’s not great for the staff.”

As befits a politician who grew up in the rough-and-tumble of Conservative Party politics following the ousting of Margaret Thatcher in 1990, Hill deftly avoided questions about his own future. Asked whether he would resign in case of a Brexit vote, he said he didn’t want to speculate but pointed out that his duty is to the whole of the EU and not just to Britain.

Hill, who described himself as “down-to-earth but optimistic” sounded a positive note on the repercussions of a Remain vote for both Europe and the U.K. He said that if Britain stayed in, the experience would not leave lasting scars on the body of the European project.

“The effect of what is traditionally thought of as being the most Euroskeptic nation [staying in] will have an impact,” he said. “The idea that [the process] leaves lots of scar tissue I don’t think follows. The key thing, as always in politics, is what happens next.”

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