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City in Europe and the World, The

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This collection of essays describes how the City of London is driving globalisation and the EU's single financial market. Its editor Stephen Barber is the Research Director of the European Research Forum at London Metropolitan University. Contributors include several `leading City figures', lecturers, the Director of the Federal Trust, a former member of Downing Street's Policy Unit, and Chris Huhne the Liberal Democrat MP.

Trade Commissioner Peter Mandelson in his foreword argues that it is still crucially important that Britain joins the euro. Don't forget that accepting the Constitution would smuggle in the euro! He writes that the City is the `economic powerhouse of Europe' when in fact the Square Mile contributes just 3% of our GDP. Germany's industry is Europe's real economic powerhouse. He urges Germany to become more like Britain, but we would be far better off if we became as industry-based as Germany is, and as we used to be.

The City of London leads the international financial markets, and these markets, not international trade, and certainly not voters, determine economic policy. The book covers various aspects of finance capital's policy package - free trade, flexible labour markets, low wages, low taxes, low inflation, minimum regulation, minimum controls, privatisation, the euro and the EU's Lisbon Strategy.

This Thatcherite model, which Mandelson wants to impose on the whole EU, has resulted in low productivity and under-investment in industry, public services, infrastructure, skills and science. Finance is parasitic on the productive base; as we can see from the current crisis, when states destroy production, workers cannot pay their debts and financial instruments turn to dust.

On privatisation, Labour's 2001 manifesto said "the Private Finance Initiative should not be delivered at the expense of the pay and conditions of the staff employed." But PFIs are designed to maximise profit by cutting costs; for example, in 2003-4 the basic pay of prison officers in the public sector was £23,307, in the private sector just £17,148.

All this is for the benefit of the filthy rich, in Mandelson's phrase. Between 1994 and 2004, the median pay of FTSE100 CEOs rose by 92% to £579,000, excluding bonuses and share options. Top CEOs retire with millions in bonuses, their reward for destroying the value embodied in wages and pension funds.