Brexit and the City: Paris, Frankfurt, Dublin Vying for New Business

Britain Isolated as EU Tightens Grip on City
THE TELEGRAPH: 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.

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. >>> By Ambrose Evans-Pritchard | Tuesday, June 09, 2009

Sterling Hammered by Interest Rate Cut
THE TELEGRAPH: The pound has slipped to a new record low against the euro and a 9½-month low against the dollar as markets bet that the Bank of England will cut interest rates today.

Markets are pricing in a 62pc probability that the Bank's Monetary Policy Committee votes to reduce official borrowing costs at noon, traders said. It came amid fresh fears for the UK economy, following the slide in Wall Street overnight and the disappointing trading statement released by Marks & Spencer.

Today's rate decision is regarded as one of the closest calls in recent months, with the City's experts and the markets divided over the course of action the Bank will take. According to a survey from Reuters, 51 of 63 economists expect the MPC to leave borrowing costs unchanged at 5.5pc.

The news pushed the pound lower still, as traders bet that Britain's official rates will drop further in the coming year, making sterling-denominated investments less attractive. Interest rate cut hopes hammer sterling >>> By Edmund Conway

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