Siegmund Warburg, the City of London and the financial roots of European integration

The process of European economic integration slackened in the 1960s. National markets for goods, most services and labour were not being integrated because they were not really being liberalised. The exception to this rule was financial services, one of which - the sale of long-term corporate and public sector bonds to relatively wealthy investors - became integrated in a quite novel way in the course of the 1960s. The rise of the so-called 'Eurobond' market was a major breakthrough in the history of European integration but it was a largely spontaneous result of innovation by private sector actors, led by Siegmund Warburg. In some measure, no doubt, the bankers' primary motive was the profit motive. Yet there is also compelling evidence that Warburg and his associates also had a political agenda. They regarded it not only as a way of making money, but also as a potent device for advancing Europe's political integration. In particular, they appreciated that European capital market integration could reinforce the case for British membership of the EEC. The resurrection of London as Europe's principal financial centre, even at a time of economic and exchange rate weakness, was a major achievement in its own right. But it was also a crucial for the resumption of European integration in the 1970s.