Arab Times

UK economic growth revised higher: official data

‘Brexit’ would be disaster for Britain’s financial sector: industry group

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LONDON, June 30, (Agencies): Britain’s economy grew more than expected in the first quarter but output was still lower compared with the end of last year, official data showed on Tuesday.

Gross domestic product expanded by 0.4 percent between Jan and March, the Office for National Statistics said in a statement.

The ONS had previously said that GDP grew by 0.3 percent in the first quarter, which was half the amount compared with the final quarter of 2014.

Last year’s overall growth was also stronger than expected — revised higher to three percent from a previous estimate of 2.8 percent, the ONS added.

In a separate report, a British exit from the European Union would be disastrous for the UK financial industry and could prompt companies to leave the country, the sector’s main lobby group said on Tuesday.

The City UK also said the British government should hold the referendum on whether to leave the bloc next year, rather than wait until 2017, so companies who are drawing up contingenc­y plans could make investment decisions as early as possible.

The group represents Britain’s financial industry, widely known as “the City”. Its warning about a possible British exit from the EU is one of the strongest yet from a sector which accounts for 12 percent of the national economy.

“If we left the single market, I think it would be disastrous for the City,” The City UK Chairman Gerry Grimstone told Reuters.

“If there was a referendum tomorrow on whether we should leave the single market, I think you would get unanimous rejection of that in the City,” he said.

Prime Minister David Cameron has pledged to renegotiat­e Britain’s relationsh­ip with the bloc before holding an in-out referendum on EU membership by the end of 2017.

“There is a strong mood in the City of ‘let’s get on with this’, with a lot of people waiting to take decisions about investment,” said Grimstone, who also chairs Standard Life Investment­s.

“People are beginning to hedge their bets by keeping alternativ­e locations available. They are working out what to do if Britain does leave and setting up parallel structures that would allow them to leave.”

Euroscepti­cs and some businesses say Britain could flourish outside the EU but Grimstone said it was “dangerous” when people outside finance claim to speak on behalf of the City.

The City UK is seeking to shape the debate ahead of the referendum by proposing 25 EU reforms that would not need treaty change - something it said was unrealisti­c before the vote.

Its “modest rather than revolution­ary” proposals focus on completing the single market, a work in progress since the bloc’s founding Treaty of Rome came into force in 1958 and which could boost the British economy by around 110 billion pounds ($173 billion), it said.

Many of the proposals chime with two major reforms already underway in Brussels: “better regulation” to cut down on rulemaking, and the creation of a capital markets union (CMU) to boost funds for companies.

Grimstone hopes the referendum will add urgency to these EU reforms.

“The problem with the Brussels pipeline is it’s like an enormously long python,” Grimstone said.

“People would like to see these things actually done and the single market improved. People are fed up with talking about it and want things to come out of the python rather than being swallowed by it.”

Calls for radical reforms such as a British veto on EU rulemaking are not realistic and a string of modest changes would have a beneficial, cumulative impact and allow the industry to get on with doing business, Grimstone said.

Britain’s finance minister George Osborne wants the relationsh­ip between countries inside and outside the euro changed to avoid the single currency countries acting as a group to impose rules on those outside.

But Grimstone said redefining relations within the EU would probably need treaty change, something even Cameron does not expect before the vote.

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The KFH PR tream pose for a photo

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