The main thing to note is that the surrenders made so far by Gordon Brown over regulation were not inevitable. They were merely that Gordon Brown didn’t dig his toes in and stick up for Britain. Similarly with this. The EU has absolutely no right arbitrarily to alter voting procedures. They can only be doine by consent,. He can withhold that consent if he wants.
The terrible thing about this is that most European countries have no financial sector at all but they will be bribed and cajoled to back the Commision’s French-inspired plans to wreck 8% of our whole economy.
Christina
TELEGRAPH 8.7.09
EU steps up assault on City ahead of Treasury White Paper
The European Union is considering a voting structure for its new apparatus of financial regulation that would make it almost impossible for Britain to block measures, even if they pose a major threat to the City of London.
By Ambrose Evans-Pritchard
EU leaders agreed in June to create three supra-national bodies with a full-time staff to oversee banking, insurance, and securities. These will have binding powers to impose rules for the first time, limiting the UK's Financial Services Authority to "day-to-day" management.
It had been assumed that the three bodies would take decisions be by qualified majority voting (QMV), the standard procedure for single market issues.
However, EU sources say the Commission is mulling a simple majority system, making it far harder for the UK to mount a "blocking minority" with like-minded allies. Malta or Slovenia would have the same voting weight on financial regulation as Britain, the world's banking capital.
Mark Hoban, Shadow City Minister, said the switch to binding powers changes the game profoundly for Britain's financial services industry, which generates 7pc to 8pc of GDP.
"The City is very seriously concerned about this. At least qualified majority voting provides a checking mechanism, since we can build support from the Nordics and countries in Eastern Europe. Any move to a simple majority must be stopped," he said.
"The Government took off its eye off the ball at the G20 summit. It needs to mount a rear-guard action to defend the interests of London," he said.
Brussels has seized on the credit crisis to launch a raft of far-reaching measures that bring Britain's services industry under EU control. The regulatory blitz overshadows the Treasury's White Paper on Wednesday, and may explain why the Government is delaying the full overhaul of the industry until after the next election.
The Commission is racing to produce a draft law on the three new bodies by September, which will then go to Euro-MPs and EU ministers for approval. Sweden's EU presidency hopes to complete the process by the end of the year.
Sources say their powers will be "tightly circumscribed" to avoid intruding on the fiscal sovereignty of member states, but say the British Government has definitively accepted "the philosophy of a single rule-book".
"Whatever is done will be sound, safe, and proportionate," said one senior figure. "It would be silly to put forward proposals that damage London. We've been hearing for 10 years that EU rules will drive financial services out of Europe, yet over that time London has grown into the biggest capital market in the world." [ But that’s just what they are proposing -cs]
Brussels is also advancing a directive on hedge funds and private equity
that draws heavily from French law and has alarmed the City. The FSA was largely excluded from the process, even though it is the world's premier regulator of hedge funds.
City Minister Lord Myners said the draft was "woefully short-sighted", needs "major surgery", and had been rushed through by countries with no financial industry to score political points.
"The UK has more skin in the game than other European countries," he said at a breakfast with the fund lobby AIMA. Some 80pc of Europe's hedge funds are in London.
Separately, the EU is drafting banking reforms that will adopt the Spanish system of "dynamic provisioning", which makes banks build up a safety buffer during boom times
2. The EU dog will not only bark but take a bite out of the City
Lord Myners told the European Commission on Tuesday that its daft, sorry draft, directive on hedge funds needs "major surgery".
By Damian Reece
But the EU is holding the scalpel and isn't about to wield it in our favour. Britain's influence to disrupt the recidivist activity of European protectionists has been waning for years under Labour.
The EU's attempt to further regulate hedge funds is just the latest example. Hedge funds played a walk on part in the credit crunch relative to banks, regulators and borrowers, be they consumers or corporates.
They're still called "alternative" investments, even though they're as mainstream as any. Like it or not, they have come to serve a crucial purpose for the institutions where our pensions and savings are held which need to diversify in the search for returns. They're also an important part of the economy's plumbing.
This directive, which seeks to shackle legitimate financial freedoms, will eventually hit us all, not just managers of hedge funds. But it will also damage our economy. London has become home to the world's largest pool of assets under management precisely because we operate under the world's most sensible and sane rules, a rare regulatory success story.
But as we report today, the EU is already planning to change its voting rules to strengthen its position and leave us even more emasculated. We simply won't have the power to change policies, such as the draft directive on hedge funds, as regulations will be voted through by simple majority, making blocking minorities nearly impossible to engineer.
Labour conveniently signed up to the EU's new triple-headed dog of supra-national regulation last month. With these new voting rules, that dog will not only bark but will have a rabid bite as well.
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