In a significant address at London's historic Guildhall, Paschal Donohoe, president of the Eurogroup, emphasized the need for strengthened relations between the United Kingdom and the European Union. The speech, delivered on September 3, 2024, focused on financial cooperation and economic progress.
Donohoe, who has served as Ireland's Minister for Finance since 2017, highlighted the importance of transforming initial steps towards rebuilding trust into a consistent approach. He addressed representatives of Britain's financial sector, discussing various topics including pension system reforms and strategies to stimulate capital markets.
The Eurogroup president expressed approval for the UK government's efforts to enhance ties with the EU. This aligns with Keir Starmer's recent initiatives to reset relations with the European bloc, aiming to boost Britain's economic growth since assuming office in the summer of 2024.
Donohoe welcomed the UK-EU Memorandum of Understanding on Financial Services, signed in 2023, which facilitates meetings of the Joint EU-UK Financial Regulatory Forum. This platform serves as a crucial avenue for dialogue on financial services regulation between the two entities.
A key focus of the address was the progress towards a euro zone capital markets union. Donohoe stressed its vital importance, especially in the face of growing skepticism about market-based solutions and widespread budgetary challenges. He noted a significant shift in attitudes and political determination among member states regarding this initiative.
"To play the 'devil's advocate', without a true capital markets union in Europe, I think the green transition as one prime example, is far less likely to happen."
The speech underscored the interconnection between financial cooperation and broader economic and environmental goals. The Capital Markets Union (CMU), a plan introduced by the European Commission in 2015, aims to mobilize capital in Europe and could play a crucial role in facilitating the green transition.
This address comes at a time when the UK's financial services industry, contributing about 7% to the country's GDP and employing over 1 million people, seeks to navigate its post-Brexit relationship with the EU. The emphasis on cooperation and shared challenges highlights the ongoing importance of UK-EU financial ties, despite the UK's departure from the European Union in January 2020.
As both the UK and EU face common economic challenges, including pension reforms and the need for sustainable finance, Donohoe's call for enhanced cooperation resonates with the broader goal of ensuring economic stability and growth on both sides of the Channel.