At another scribble ‘Brussels’. At the third put ‘Washington’. Then gather some of your closest financial friends and prepare to play Seat of Power.
At this stage pick an issue – tax, for instance. Put the piece of paper on the table and if you believe most decisions that affect UK taxpayers are taken in, say, Brussels, you move that point of the triangle to the apex. Then move through the subjects.
With an issue like corporate governance or audit regulation you and your friends might all put Washington at the apex. And so on.
The winner is the person who picks an issue where everyone agrees that London should be at the apex. Why? Well if someone is able to identify an issue where all the members of any financially informed group can agree that the power rests in London, it’s an unlikely event worthy of recognition.
That may not quite be the reality today, but it’s not far from it. And it’s certainly where we are heading.
On many issues the US Securities and Exchange Commission wields more power than the UK’s Financial Services Authority (or any other London-based regulator for that matter). That’s why the Big Four is devoting so much time to persuading the SEC not to require registration of European auditors.
On other topics, it is not domestic tax law that is changing the tax practices (and tax bills) of many UK companies, it is the European Court of Justice.
Ask Marks & Spencer.
And we haven’t even touched on international accounting standards yet.
Will they work effectively without Washington’s buy-in? Maybe. It’s just hard to imagine how, that’s all.
So do we accept the disempowering inevitability of our lot and just get on with it? Or do we fight back and seek to recover our lost sovereignty? Well there’s certainly no easy answer and there’s probably no single answer.
But picking our fights carefully is essential – we won’t win all the arguments.
The first step to adjusting to the new financial world order is to recognise the reality, however. And a quick game of Seat of Power might help with that.
Email your views to email@example.com.
Mark McMullen joins the private client services team from Smith & Williamson
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