EU markets man tries to soothe City

THE incoming EU internal market commissioner, Michel Barnier, held out an olive branch to the City ahead of tomorrow&rsquo;s negotiations on a new pan-European regulatory framework.<br /><br />As concerns grew in London over the prospect of unnecessary red tape, the Frenchman said: &ldquo;I know the importance of the City. I know the importance of this major financial centre for growth in Britain and for all of Europe&rsquo;s economy.&rdquo;<br /><br />He added: &ldquo;It&rsquo;s not my job to be nice or nasty. I have to work in Europe&rsquo;s interest to draw lessons from the crisis.&rdquo;<br /><br />The centrepiece of the European Commission&rsquo;s plans is the establishment of a European Systemic Risk Board, which will monitor macro-economic headwinds, and three watchdogs for major financial industries.<br /><br />John McFall, chairman of the Treasury Select Committee, has warned that rushing the plans through would &ldquo;create a muddle&rdquo;.<br /><br />Yesterday Chancellor Alistair Darling said the UK would insist on several &ldquo;red lines&rdquo; at tomorrow&rsquo;s talks. In particular he confirmed the UK would not sign away its fiscal sovereignty to a body which could order member states to pump taxpayers&rsquo; cash into a European institution.<br /><br />Darling also said the new agency&rsquo;s powers over firms should only be exercised when &ldquo;absolutely needed&rdquo; and that the ability to declare a banking emergency should rest with the European Council, not the regulator.<br /><br />Many financiers in the City have been worried by Barnier&rsquo;s appointment to the EU&rsquo;s finance brief. French president, Nicolas Sarkozy, stoked fears at the weekend by describing Britain as the &ldquo;big losers&rdquo; in failing to secure the post. Barnier&rsquo;s new role allows him to revamp financial regulations and impose a tougher regime.<br /><br />Simon Walker, chief executive of private equity body the British Venture Capital Association, said: &ldquo;Britain has surrendered a key economic portfolio.&rdquo;