Osborne set to vote against tough EU hedge fund legislation

BRITAIN’S new coalition government faces its first brush with the European Union next week as the bloc’s finance ministers are on course to back tough new rules on hedge funds against UK wishes.

EU ambassadors have reached a deal on draft measures to force managers of hedge funds and private equity groups to undergo direct pan-EU supervision and abide by pay curbs, an EU diplomatic source said yesterday.

The measure is part of a global push to learn from the financial crisis and shine a light on all corners of the financial market.

Britain and the Czech Republic were the only two members of the 27-nation bloc to oppose Wednesday’s agreement which will be put to finance ministers meeting in Brussels for formal backing next Tuesday, the source added. Britain’s new finance minister, George Osborne, is expected to attend and faces being outvoted at his first EU meeting.

Britain opposes the measure because it and the US believe it sets the bar too high on third country funds and managers to offer their services to European investors.