Solvency II is "shockingly bad" - CBI boss

Solvency II is “shockingly bad”, according to the director general of the CBI.

In a strongly worded speech at the business body’s annual London dinner, John Cridland warned that the proposed insurance directive could undermine insurance companies’ ability to provide infrastructure investment.

He said Solvency II was one of a number of ‘dubious’ recent initiatives from European Internal Market and Services Commissioner Michel Barnier.

Describing the directive as “a two-in-one hit from Laboratoire Barnier,” he said: “First, they would have a major impact on insurance companies and pension funds as potential providers of the long-term investment capital critical for our infrastructure renewal.

“As drafted, the proposals promote an investment strategy of punting on supposedly “risk-free” EU sovereign debt and shortening the duration of corporate debt investments. This suggests that money is better spent on government bonds than being put to work funding energy, road and air infrastructure projects.”

He said Commission President Manuel Barroso had to get a grip on his empire “before lasting damage is done”.

“Our friends in Europe need to consider the cumulative impact of all the ill-judged decisions they’re taking, and get with the growth agenda. For London business – and for all business – it’s vital that they do.”