GregclarkGreg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Britain’s financial
services sector is our single most successful industry. It is our biggest
exporter – providing the foreign currency we need to pay for other imports; it
contributes one in every eight pounds of the taxes that pay for our public
services; and it employs (directly and in related businesses) over two million
people: not only in the City of London – but all over the United Kingdom.

The success of UK
financial sector over the years is rooted in its internationalism. The industry
is not just concerned with servicing the domestic economy, but also with
trading with the rest of the world – especially the rest of Europe. More than
twice as many euros are traded in London than in all of the eurozone countries
put together.

As a result of the
crisis in the eurozone, a fully-fledged banking union, with the Frankfurt-based
European Central Bank at its head as supervisor, is beginning to take shape. Britain
will not be part of the euro and will not be part of banking union. But it is
absolutely critical to our prosperity that our financial services industry is
not excluded from Europe’s single market as a result of banking union.

The Ecofin meeting
(of the economic and finance ministers of the 27 EU countries) last month
followed a long series of formal and informal discussions throughout the year. The
outcome – agreed unanimously – should be welcomed by every taxpayer in Britain.
We achieved an agreement that the new arrangements for eurozone countries
cannot, as a matter of law, be used to block the UK’s access to the single
market. The words that George Osborne proposed, and which were agreed, are
clear: “no action, proposal or policy of the ECB shall, directly or indirectly,
discriminate against any member state or group of member states as a venue for
the provision of banking or financial services in any currency.”

In addition,
important decisions of the European Banking Authority would in future require a
majority among banking union members and a majority among non-members.

These, and
supporting changes to other rules, now have to be discussed with the European
Parliament and it is essential that their clarity and integrity remains intact.

The lesson I draw
from the Ecofin agreement resonates strongly with what the Prime Minister said
in his landmark speech on Europe last week: far from it being heretical to
contemplate change, the fact is that, in regard to important aspects of the
policies and structures of the EU, change is already being negotiated. These changes are currently focused on
the response to the crisis in the eurozone. 
But as David Cameron said, Europe faces many other urgent challenges –
especially those of global competitiveness and democratic accountability.

The discussions, so
far, on banking union suggest that it is perfectly possible to make sure that
new arrangements for the eurozone work fairly for countries that have kept
their own currencies. And, on this and other issues, they indicate that it is
possible to do so without rancour – and, vitally, without the loss of important

Domestic politics
is, in essence, a permanent debate about a simple question: ‘how can things be
done better?’ Why shouldn’t the same apply to the European Union?

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