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’s negotiations on a new pan-European regulatory framework.
As concerns grew in London over the prospect of unnecessary red tape, the Frenchman said: “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’s economy.”
He added: “It’s not my job to be nice or nasty. I have to work in Europe’s interest to draw lessons from the crisis.”
The centrepiece of the European Commission’s plans is the establishment of a European Systemic Risk Board, which will monitor macro-economic headwinds, and three watchdogs for major financial industries.
John McFall, chairman of the Treasury Select Committee, has warned that rushing the plans through would “create a muddle”.
Yesterday Chancellor Alistair Darling said the UK would insist on several “red lines” at tomorrow’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’ cash into a European institution.
Darling also said the new agency’s powers over firms should only be exercised when “absolutely needed” and that the ability to declare a banking emergency should rest with the European Council, not the regulator.
Many financiers in the City have been worried by Barnier’s appointment to the EU’s finance brief. French president, Nicolas Sarkozy, stoked fears at the weekend by describing Britain as the “big losers” in failing to secure the post. Barnier’s new role allows him to revamp financial regulations and impose a tougher regime.
Simon Walker, chief executive of private equity body the British Venture Capital Association, said: “Britain has surrendered a key economic portfolio.”