Nothing hard yet but the headline says it all. Brown could have dug his toes in and said “No concessions for us - no budget for you”
Christina Speight
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TELEGRAPH Blog 19.6.09
Regulation of City may be handed to Brussels
Hopes that Gordon Brown would make a stand against the European Commission's financial regulatory proposals, which could see control over the City transfer from London to Brussels, appear to be fading.
By Bruno Waterfield in Brussels
Arriving in the Belgian capital for an EU summit, the Prime Minister insisted that European demands for regulation following the financial crisis could not be used to chip away at national sovereignty over fiscal budgets.
"It is in Britain's interest that we have improved cross-border supervision of financial institutions across Europe," he said.
"Better early warning, better co-operation on supervision, better enforcement of rules is in our interest. European action must be practical and it must be effective.
"It is only logical that where a supervisory decision would have an impact on the taxpayer that the decision should be for the relevant national authority."
Mr Brown's main concern is that the European Commission's proposals to create EU financial supervisors could create new powers for Brussels to tell the British government when, and by how much, to bail out banks.
"At the end of the day, it is a national authority that will have to take the financial responsibility for dealing with the problems of individual banks or individual companies.
"That is why the decision about any fiscal action has got to be one that has to be taken by the authority that has the resources to enable them to do so, and that is the national government," Mr Brown said.
"When we had to take action with the Royal Bank of Scotland or Lloyds TSB or Northern Rock it was British public money which had to be used to do so."
In speech on Tuesday, Jose Manuel Barroso, the EC president demanded a "binding dispute settlement mechanism" for the EU to decide which countries should pick up the bill for failing banks with cross-border businesses and subsidiaries.
Arriving at the summit, Angela Merkel, the German Chancellor, also backed "binding common European rules" as "a major step forward qualitatively".
EU leaders are agreed that they need better oversight of banks and markets to prevent a repeat of last year's financial crisis. The proposals involve creating three pan-European watchdogs next year to ensure countries introduce new rules on supervision, and a new European Systemic Risk Board that would monitor the build-up of risks to stability.
"These proposals have disproportionate implications for us," said a British official.
Plans for a European System of Financial Supervisors (ESFS) would swallow up national bodies into a single EU authority "endowed with legal personality", a prospect that has alarmed British officials.
"There is the possibility of EU regulators overruling national regulators," said one. "This is extremely important because of the pre-eminence of City of London as a financial centre."
Mr Brown appears to have won a clear guarantee that the EU financial supervisors will not be able to impose decisions with a fiscal impact on national governments but at the price of giving up other regulatory powers.
"Decisions taken by the ESFS should not impinge in any way on the fiscal responsibilities of member states," said a draft summit text.
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