Honorary Chairman & Board member
Crisis in Europe?
The European Union is going through a very serious crisis, and so is the EU financial services industry, because of the war launched by the Russians in Ukraine, plus the tensions in the markets, and so many areas of the world.
Europe encompasses about 550 million people and the rest of the world 7.5 billion – but we still want to tell the world how to behave in the name of human rights’ principles or so many other considerations which seem very important to our European elites but of very little interest to the people, who first need food…
Europe is, with the USA, a master in regulation creation, which annoys not only their own citizens but the entire world.
To focus on some basic indicators, the world today is made up of a more or less homogenous block of four dominant countries (the US, Russia, India, and China) representing 4 billion people and guided by four strong authoritarian leaders - versus a Europe of 550 million people without a real leader, only professional politicians without vision.
When speaking at a conference in India a few years ago, I paid a courtesy visit to the Indian Financial Services Head Regulator to whom I explained, briefly, where we were up to in terms of regulation; his comment was very simple - we have 1.5 billion people to feed and no time for these fantasies!
Therefore, our Financial Services industry is not competitive anymore and most of the business goes to Singapore, Hong Kong or Dubai – or Gujarat in India!
As an example, the average size of an investment fund in the USA is 5 times the size of a European fund and the cost of compliance 50% less.
Our fundamental problem is not so much that the economy is doing badly, but the crucial lack of political management.
Europe was created after World War II to secure peace, freedom, and economic growth.
It did – for about 30 years, and then, wrongly inspired by some evil dogmatic influence, the paradise turned into hell! A 21st century version of the 1984 of George Orwell…
New rules every day are affecting every single sector of European citizens’ lives, and this has pushed them to increasingly support the populist movements.
This is because regulation is not the answer to all of the problems of a continent, despite the restrictive views of the “State-über-alles” movement! Otherwise, since Moses, all the issues of the world would have been solved for the benefit of humanity…
In addition, regulation gives a false sense of security and deprives people of their elementary sense of responsibility.
This is fundamentally what has been deterring the people of Europe from the European dream; it is the failure to build a harmonious free space. Absurdistan or the millefeuille bureaucracy that doesn’t work; too procedural, not enough innovation!
If the only ambition is consumer protection and the answer is over-complicated rules, don’t be surprised if a majority of European citizens do not believe in Europe anymore!
The European Financial Services industry has lost approximately 650,000 jobs since the implementation of the various heavy regulations from 2007-2008 onwards - mainly front-office jobs (servicing consumers) - whilst creating approximately 85,000 compliance jobs and recruiting 55,000 bureaucrats to supervise the industry… What an achievement!
The bureaucrats of Brussels, Paris and other places will not read this article and, even if they do, they will not understand the message. However, since Torquemada, trying to make the people happy against its will is not very popular!
If the European Commission wants to prevent a tsunami of populist votes at the European Parliament at the next election, there is only one route: to apply an expanded version of REFIT (https://commission.europa.eu/law/law-making-process/evaluating-and-improving-existing-laws/refit-making-eu-law-simpler-less-costly-and-future-proof_en ) – 25% of European Laws to be repelled, 50% of the remaining legislation to be revisited after a solid impact assessment – then Europe will become, again, a free space for happy citizens…