Coverage of webmission08 on blogsphere:

+ UK Companies Seeking Silicon Valley Connections
+ The British are coming!
+ Webmission08 - edocr makes the final cut!
+ WebMission08 results out
+ Webmission08 official site

Press coverage:

+ Ultimate networking for UK Web 2.0 firms
+ Silobreaker Selected for Web Mission 2008 UK's best web companies to be showcased in Silicon Valley networking event

Groups setup for Webmission08:

+ edocr
+ You noodle

Best regards
Manoj

While direct contacts between the Bank of England and EU institutions are unimportant and infrequent because the UK has retained its own currency property search, the Governor of the Bank of England’s concern to obey European law was at least partly to blame for the Bank’s unimpressive performance in the Northern Rock affair. The imprecise wording of allegedly relevant directives, especially on insider trading, delayed and hampered decision-taking in the critical weeks in August and September when Northern Rock sought help from its regulator, the FSA, and the Bank. Depressingly, the first question in the minds of senior Bank of England officials seems to have been ‘are we acting in accordance with European law?’, not ‘what is the right course of action for Britain and its financial system?’

In some respects the EU contribution to decision-taking was downright wrong. Neelie Kroes’ spokesman referred to ‘the injection of public money’ into Northern Rock, echoing numerous statements in British newspaper about how ‘government money’ was supposedly being wasted on ‘a bank bail-out’. In fact, no government money had been injected. Instead Northern Rock had received a loan and a government guarantee on its deposits. A loan is a loan and must be repaid; it is not a gift. Further, the loan was at a penalty rate and a fee was charged for the guarantee stock trading, so that significant sums – running into tens of millions of pounds – have been paid by Northern Rock to the state. The effect of Northern Rock’s payment of these items has so far been positive for the public sector’s finances. It is possible that Northern Rock may ultimately not be able to repay the Bank of England’s loan in full, and that the intervention may have a net cost to the taxpayer. But – as noted earlier – that was not Sandler’s assessment in February this year.

A case can be made that the Bank of England’s loan to the solvent but illiquid Northern Rock in the autumn of 2007 amounted to nothing more than a particularly large-scale lender-of-last-resort operation and was not ‘state aid’ at all. If it had been deemed not to be state aid low cost life insurance, the deadlines and 2,000 redundancies in March 2008 would not have been necessary. The British government should have been arguing with the European Commission, as every other European government does, instead of meekly accepting its diktat.

As far as Britain and the EU are concerned, the implications of the Northern Rock fiasco are at least twofold. First, if its agencies are to function freely and effectively (as they did in the past), the British state must repatriate powers from the EU. At present bodies such as the Treasury and the Bank of England are unsure how their responsibilities are to be defined, and the uncertainties affect the quality of their decision-taking. Secondly, Parliament must either pin down the meaning of EU directives or replace such directives with clearly-expressed English law which is superior to the directives. Of course, the deliberate replacement of loosely and ambiguously stated European ‘law’ (i.e., the so-called ‘law’ contained in directives and regulations) by better home-made law conflicts with commitments made by the British government in a succession of treaties home owner insurance
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A basic question raised by the shambles of the Northern Rock affair is therefore whether it would be sensible for Britain to renegotiate its membership of the European Union. In the view of a large and growing number of people in this country, the UK’s membership of the EU on the present terms is becoming increasingly difficult to reconcile with the efficient and sensible conduct of British public policy. The European aspects of the Northern Rock fiasco therefore illustrate a wider and more important theme.