George Osborne has delivered a shot across the bow to Britain's European partners in a speech delivered to the think tank Open Europe and the conservative Fresh Start group.
The chancellor said:
The City of London is not, as some of our continental friends kid themselves, in competition with Paris and Frankfurt. It is in competition with New York, Hong Kong and Singapore.
Osborne was certainly right to remind the UK's European partners of the value financial services provide to the UK economy.
In 2011, financial and insurance services contributed £125.4 billion in gross value added (GVA) to the UK economy, 9.4 per centt of the UK’s total GVA. London accounted for 45.8 per cent of the total financial and insurance sector GVA in the UK in 2009.
The sector’s contribution to UK jobs is around 3.6 per cent. Trade in financial services also makes up a substantial proportion of the UK’s trade surplus in services. In 2010-11 the banking sector alone contributed £21bn to UK tax receipts in corporation tax, income tax and national insurance.
That's why we need to be especially worried about threats to the City from the European Union - Any damage to our financial services would be a blow to the whole of the UK. No surprise then that many other European nations find the British to be overly sensitive when it comes to matters of financial regulation.