* Justice chief warns Brexit would cost City dearly
* Reding - UK departure would reduce London to offshore
By John O'Donnell
BRUSSELS, Feb 17 London's financial services
centre would lose access to the wider European Union should
Britain quit the bloc, the EU's justice chief said on Monday,
warning that such a move would reduce its status to that of an
Viviane Reding's blunt comments come amid a heated debate in
Britain over its future in the 28-country European Union and
will reinforce fears in the City of London that a departure from
the EU will hurt its position as a global financial capital.
"The City would most definitely lose its unhindered access
to the (EU's) single market in the case of an exit," Reding, the
EU's Justice Commissioner, told an audience at Cambridge
"EU member states would obviously have no interest in
supporting what would then be an offshore financial centre
competing with their own financial firms," she said.
Reding cautioned that Britain, were it to leave, would find
itself in a similar situation to that of Norway, which applies
the rules of the neighbouring European Union although it is not
"It's difficult to see why the other member states would
grant the UK unfettered access to their markets without
requiring it to apply the EU's rules," she said in the text of
her speech, citing research that found British households would
be 3,000 pounds ($5,000) worse off annually outside the EU.
Prime Minister David Cameron has promised to renegotiate the
terms of Britain's EU membership and hold an "in-out" referendum
if re-elected in 2015, raising fears the world's sixth-largest
economy could quit the club it joined in 1973.
Many in the City of London, which accounts for roughly
one-tenth of the British economy and is rivalled globally only
by New York, have been growing increasingly uncomfortable as
this debate has unfolded.
While opponents of European integration say it has been
imposed by out-of-touch bureaucrats, a growing number of banks,
including Goldman Sachs and JPMorgan, have warned about the
risks of a possible British exit, known as a 'Brexit'.
London dominates the $5-trillion-a-day foreign exchange
market, trading twice as many dollars as the United States and
more than twice as many euros as the entire euro zone.
Financial services contributed 65 billion pounds in tax in
the last financial year to March 2013, or 12 percent of total
"If the UK were to leave the EU, however, it would no longer
be able to influence EU regulation," said Reding. "It would have
to live with the rules decided on by the EU countries."
A possible referendum on EU membership is not the only
factor causing uncertainty about Britain's future.
Scotland holds a referendum on independence in September and
European Commission President Jose Manuel Barroso said on Sunday
it would be "extremely difficult, if not impossible", for an
independent Scotland to win approval from EU governments to
become a member of the bloc.