This is how it will be. We are going to be in a permasnent minority and our national institutions will be swept away into a a Franco-German kind of state capitalism. The City will be finished, its brightest sparks will leave, and I would not be surprised to find the Rating Agencies downgrading sterling debt.
Pssst! Anyone want to buy Canary Wharf?
Christina
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TELEGRAPH 3.12.09
Alistair Darling loses EU fight over fiscal sovereignty
Alistair Darling on Wednesday made a major concession weakening Britain's power to block new European Union financial regulators from taking decisions that could result in a bill for the taxpayer.
By Bruno Waterfield in Brussels
The Chancellor lost a critical fight in Brussels over a British demand that the "burden of proof" should be on European Supervisory Authorities (ESAs) to justify their actions in inevitable disputes over national sovereignty.
Instead, Europe's finance ministers decided the opposite - that, in the event of a challenge, the complaining country must first get the support of a majority of Europe's 27 governments in order to block an ESA ruling.
"The real concession is that burden of proof will rest with Britain, or the complainant country. It has to get a majority against the supervisor. It will not be a question of the supervisor having to get a majority to support it in a dispute with a national government," said an EU official.
"This tips the balance."
Mr Darling insisted that he had secured "safeguards" ensuring that Britain would be able to appeal measures that it regarded as "impinging on the fiscal responsibilities of member states".
He also beat off a European Commission proposal that it should be able to declare a financial crisis, with the power to instruct EU regulators to override national authorities.
Under the agreement, a "council" of finance ministers must declare an emergency. "If the council decides there is a crisis then it does allow regulators, where it is necessary, to ask the home regulator to take action. If we believe that it impinges on our fiscal responsibilities then there is an appeal system leading to an effective veto," said Mr Darling
.
But the Conservatives have accused the Government of having "caved in on its red line" that EU regulators must not be able to take decisions that impact on British taxpayers.
"Does the Government have a veto over any decisions made by the ESA in an emergency that have a fiscal impact on Britain, or do they have to make an appeal against these decisions? This is another example of the Government failing to stick to its red lines," said Mark Hoban, the shadow financial secretary.
"It is clear that they can now make binding decisions which could have a fiscal impact but all that national governments can do is to appeal against these decisions."
Christine Lagarde, the French finance minister, who successfully blocked the British "burden of proof" demand, hailed the agreement as "a result".
"We're in the process of creating a real European authority," she said. "It was a laborious process; not everyone was on same wavelength."
Britain and France, whose relations are already strained after the appointment of a Frenchman as the commissioner in charge of financial regulators, clashed over their different visions for the watchdogs.
France has consistently favoured extensive powers but Britain has fought off proposals to win some guarantees preventing powerful regulators from ordering banks and governments what to do.
Mr Darling has invited Michel Barnier, the newly appointed French European commissioner for financial services, to come to London.
"We look forward to working with Monsieur Barnier, the newly appointed commissioner," he said.
"I have today invited him to come to London to meet me and, I hope, to meet other people in the industry, in the City."
The British Bankers' Association on Wednesday accused Nicolas Sarkozy, the French president, of damaging confidence in the new regulators by boasting that the EU "model" had triumphed over the City of London's "financial capitalism".
"Monsieur Sarkozy must surely recognise that he has undermined the EU with his statements and put a question mark over the impartiality of his nominated commissioner that will not be easily dispelled," Angela Knight, the BBA's chief executive, said.
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BLOOMBERG 2.12.09
EU Finance Chiefs Overcome U.K.-France Bank Clash (Update1)
By Mark Deen and Emma Ross-Thomas
Dec. 2 (Bloomberg) -- European Union finance ministers overcame a clash between the U.K. and France to reach an agreement on overhauling financial supervision for the bloc.
“We’ve found a compromise. We’re in the process of creating a real European authority,” French Finance Minister Christine Lagarde told reporters in Brussels today. “It was a laborious process; not everyone was on same wavelength.”
The EU is aiming to revamp banking supervision a year after the bankruptcy of Lehman Brothers Holdings Inc. exacerbated a financial crisis that forced European governments to spend, lend or guarantee more than $5 trillion to support banks. An economic-risk watchdog led by central bankers, as well as new EU agencies to oversee banks, insurers and investment firms are intended to prevent a repeat of the worst global crisis since the Great Depression.
Finance ministers had sparred over how much power the European supervisors should wield over national authorities. The clash in Brussels came amid U.K. concern that the appointment last week of Michel Barnier, an ally of French President Nicolas Sarkozy, as EU commissioner for internal markets will see London face a tougher regulatory environment during his five-year term.
Big Losers
“It’s the first time in 50 years that France has had this role,” Sarkozy said in an interview with Le Monde published on Nov. 28. “The English are the big losers in this business.”
Ahead of the meeting today, U.K. Chancellor Alistair Darling wrote in the London-based Times calling for less power for the Europe-wide watchdogs and said that success of businesses in London was in the interests of Europe.
“London, whether others like it or not, is New York’s only rival as a truly global financial center,” Darling wrote. “No other center in Europe offers the same range of services. It is in all of Europe’s interests that they prosper alongside their close European partners.”
London has already been eclipsed by New York and Singapore as a global financial center, according to a Bloomberg Global Poll in October.
Deal
Under the deal, countries can overturn European supervisors’ decisions by garnering a simple majority among the 27 EU members, Lagarde said.
France had wanted members to need a qualified majority to overturn a decision, while the U.K. tried to restrict the supervisors’ control, calling for the burden to be on them to seek a majority before forcing a country to use public funds for a bail out.
In non-emergency situations, voting will be based on members present rather than all member states.
“It seems like a loss for the U.K. but there’s still a big debate to be had about the consequences of calling an emergency,”
Simon Gleeson, financial regulatory specialist at Clifford Chance LLP in London, said in a telephone interview today. “To the extent this means something, I think it is a loss for the U.K.”
The new regulatory system, including a European Systemic Risk Board of central bankers and national regulators, would ensure EU market laws are implemented the same in every country and strengthen supervision across the 27-nation bloc.
The board is designed to issue warnings and recommendations, flagging problems such as the build-up of investments in U.S. subprime mortgages. Three new European Supervisory Authorities would oversee banking, securities and insurance and pensions, according to the commission’s proposal.
“It wasn’t easy merging the goals of an effective European supervision structure, keeping national authorities capable, better managing cross-border conflicts where they exist and respecting the rights of national parliaments,” German Finance Minister Wolfgang Schaeuble said.
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To contact the reporters on this story: Emma Ross-Thomas in Brussels at erossthomas@bloomberg.net; Mark Deen in Brussels at mdeen@bloomberg.net.
Last Updated: December 2, 2009 10:44 EST
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TELEGRAPH Blog 3.12.09
Darling vs Sarko: French taunts are annoying but true
By Tracy Corrigan
The latest Darling/Sarkozy spat transported me back in time, madeleine-like, to the late 1970s. My French pen-friend was visiting and whenever we walked down the street or drove to a local beauty spot, she pointed out every French car we passed along the way. “Citroen, Peugeot, Peugeot, Renault…” It had never occurred to me to take patriotic pride in car production, so I tried to shrug it off - having swiftly scanned the horizon for British cars with little success. Still, it galled.
So it is was with some sympathy that I read Alistair Darling’s riposte in the Times this morning. Although he does not refer to Nicolas Sarkozy by name, it is obvious that the French president’s ghastly gloating about the appointment of compatriot Michel Barnier as internal market commissioner in Brussels is ringing in his ears.
“Yah boo sucks,” was Sarko’s message, loosely translated. For sticklers, a more literal rendering goes something like this: “Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]? I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism.”
Mr Darling is British. So he maintained his sang-froid in the face of this provocation. “Europe is rightly proud of its global financial centres”, he claims, despite the fact that Sarkozy doesn’t seem the least bit proud of the City.
“It is undeniably in Europe’s interest that Britain’s financial hubs, the City of London and Edinburgh, flourish.” Well, not really. France wants Paris to become a regional centre for asset management and most of Europe, with some justification, blames the risk-taking, bonus-seeking culture of the City for contributing to the financial crisis.
However, Mr Darling is right to point out that there is a wave of global regulation in the wake of the financial crisis, and that so far the Group of 20 has proved a surprisingly successful means of coordination. He is also right to point out dangers.
“We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market. National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion.”
And that is the rub. Since the crisis, there has been a massive centralisation of financial regulation within the EU. A swathe of directives covering derivatives, capital requirements, bonuses and private equity is on the way. Most significantly, Mr Darling alludes to the creation of new pan-European regulatory bodies, which will operate in securities markets, banking and insurance.
There is some potential benefit from this: the UK will no longer have to accept weak EU banks under the passport system. But there are also enormous potential disadvantages: not simply “confusion” but contradiction, turf wars and the politicisation of regulation to suit national agendas. On this score, Sarko’s posturing is hardly reasurring.
Most annoyingly of all, though, Sarko, like my French pen friend, is right. There are very few British cars and quite a lot of French ones on our roads. And the regulatory system under which the City will operate is being designed in Brussels and overseen by a Frenchman.
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