Professor Philip Lane:

I share the view that we have to think seriously about the side effects of an increase in any one sector. Finance is one sector but there are other sectors that are very big too. It is often said that we have an over-reliance on multinationals, whether in financial or non-financial services and, while there are some similarities between them, there are also some differences. Concerns about crowding out other activities and over-concentration need to be addressed. We can do this by ensuring that there are supports and training so that other sectors of the economy can operate. We have a very open economy so many of the jobs in the multinational sector are taken not by domestic people but by immigrants, which reduces the risk of crowding out but adds to congestion in housing, transport and public services. The Government has to be alive to recognising the implications of rapid expansion in any of these international sectors.

The Single Supervisory Mechanism for banks and the fact that financial supervision and rule-making is taking place at European level reduce the risk of being captured. There is an idea that small countries can be captured by interest groups but the commitment to supervisory convergence across Europe ensures global firms do not play one jurisdiction against another. Many lessons have been learned by regulators, who exist to protect the public interest. The internationalisation of finance has to be met with the internationalisation of regulation.