Luther Pendragon has learnt that Britain’s new Liberal Conservative Government is likely to fail their first EU test tomorrow (Tuesday) when the AIFM Directive will be adopted by the Ecofin (Tuesday), but they will secure some minor concessions. By downplaying expectations over the weekend the UK is hoping to claim a minor victory tomorrow. However this is not as suggested by some in the media the end of the processes because the final agreement much be reached jointly with the European Parliament, who will adopt a position hostile to Britain’s hedge fund industry.
As a veteran of these inter-institutional negotiations I know only too well that minority positions, that are not robust from beginning to end and, in particular, fail to generate sufficient support from beyond their own immediate circle, will be marginalized and ultimately fail.
Consequently media reports quoting a British civil service source as saying “We will make our case but there is a majority in favour of the directive and we don’t want to be in a position where we squander any negotiating capital we have for the future on an issue it doesn’t’ appear we can win” confirms my worst fears that Britain is not putting up a robust defence. It would take a brave French civil servant to deliver such news to the Président de la République.
During my time as an MEP, under the former Conservative and Labour administrations, the British civil often deployed this argument. I’m still intrigued to know what this future ‘challenge’ will be and can it be more important that the future health of the City as a global financial centre?
If Britain is not successful tomorrow then serious questions must be asked about the strategy deployed by both the hedge fund industry and Britain’s civil service in seeking to protect Britain’s financial services industry. This is essential if Britain is to be more successful in addressing future EU challenges, in particular other proposals to tighten financial regulations and supervision and the significant moves by the EU into the whole area of economic governance.