UK finance chief warns new EU overseer against over-regulation
UK finance chief Alistair Darling has warned the EU's new financial overseer, Frenchman Michel Barnier, against trying to over-regulate London. French President Nicolas Sarkozy inflamed tempers recently by praising French-style financial regulation.
AFP - British Finance Minister Alistair Darling warned the European Union's new financial overseer on Wednesday against meddling with London's banking hub, amid a simmering cross-Channel row over regulation.
While acknowledging the need for reform following the global economic crisis, Darling warned the Frenchman charged with driving it through that miscalculated changes could send financial services out of Europe.
"London, whether others like it or not, is New York's only rival as a truly global financial centre," the Chancellor of the Exchequer wrote in the Times newspaper, adding: "It is in all of Europe's interests that they prosper."
Darling warned against subjecting the City of London financial district to undue European control, saying of future reform: "Get it wrong and we risk losing business to less regulated jurisdictions."
He spoke shortly before EU ministers agreed a new pan European framework for overseeing regulations.
Frenchman Michel Barnier was named to the prized European Union post of overseeing banks and other financial services last week, sparking outrage in the City which accuses him of being against the free market economic model.
The British government has been fighting efforts, under discussion [as] EU finance ministers met in Brussels on Wednesday, to regulate banks, insurers groups and markets from Brussels.
Fears about Barnier's intentions were inflamed by comments by French President Nicolas Sarkozy, who said the English "were the big losers" of a carve up of EU jobs that saw Britain take the top foreign affairs post.
"Frankly, after everything that has happened with the financial crisis, it is very reassuring that it is French ideas about regulation that are winning out in Europe," Sarkozy said at the weekend.
His remarks were badly received in London, with one analyst, Howard Wheeldon at BGC Partners, describing them as "unfortunate, arrogant and hardly diplomatic".
"This whole very nasty European regulatory process is designed to permanently eradicate hard-won competitive advantage that UK financial markets have enjoyed over very many years," Wheeldon said.
British newspapers are no less angry, with the Times comparing the threat to that posed by French president Charles de Gaule in the 1960s and even to French emperor Napoleon Bonaparte.
Barnier sought on Monday to ease what he described as "greatly exaggerated worries" in London, telling French radio: "I know how important the City is.
"I know the importance of this financial centre for the growth of the United Kingdom and for the economy of the whole of Europe."
The head of Britain's FSA, Adair Turner, also told FRANCE 24 television that he expected Barnier to work for the good of Europe as a whole.
"We have been allies but also before that ennemies for so many centuries going back... that we can't quite give up the slight caricature of our positions," he said in an interview to be broadcast Friday.
"I'm sure that M. Barnier will be attempting to work out what is effective regulation for the good of the whole of Europe."