A joint statement yesterday said that legislation to be drawn up by Brussels this autumn “should ensure that such powers should not impinge in any way on the fiscal responsibility of members of states”. Chancellor Alistair Darling said Britain had upheld the principle that “taxation is clearly a matter for member states”. However, there was no change in the crucial proposal to give EU bodies the ultimate power to override national regulators in areas of banking, insurance and securities. The Commission aims to create three “authorities” with their own staff, full-time president and independent budget. If there is a dispute between regulators from EU countries over how to proceed, these EU bodies can “settle the matter” by binding mediation. The European Court would have final jurisdiction. The wording would appear to reduce Britain’s Financial Services Authority (FSA) to a subservient arm of the EU apparatus, limited to “daily oversight”. Britain does not have a veto since legislation that affects the “internal market” is decided by qualified majority vote (QMV). While some East European states share British concerns, Mr Darling is largely isolated in trying to defend the interests of the City of London. EU leaders will grapple with the subject at a Brussels summit later this month. There is widespread suspicion that Paris and its allies have seized on the financial crisis to rein in Anglo-Saxon capitalism and impose their Colbertiste ideology on the City. Germany will play a pivotal role in any outcome. While Berlin favours tougher rules than the FSA’s “light touch” model, both the Bundesbank and the regulator BaFin are jealous of their own oversight powers. Finance minister Peer Steinbrück reportedly views the plan as “too ambitious”. An EU diplomat said it was hard to gauge whether Britain can count on a blocking minority, since most countries kept quiet at the meeting. Finland’s Jyrki Katainen said a number of states may have concerns about the plan: “For instance, can the supranational body take decisions for the national supervisors?” He backed calls from the International Monetary Fund and the US Treasury for a rigorous health check of Europe’s banks. “In order to restore confidence we need European-wide credible stress tests,” he said. The idea was shot down by Mr Steinbrück. “European banks are clearly different from those in the US,” he said, adding that there was no need to probe or reveal the capital adequacy of each bank.Britain isolated as EU tightens grip on City
Britain has been unable to block plans for an EU regulatory machinery with binding legal powers, securing only a loose agreement at a key meeting of EU finance ministers that any proposals should not interfere with budget and taxation policy.
Wednesday, 10 June 2009
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