I sympathise with Alistair Darling and his defence of the City. When he’s not contending with Gordon Brown’s suicidal Tobin tax proposals, Darling has to confront Nicolas Sarkozy’s calculated anti-Anglo popular politics.
Yesterday, the Elysees’s Puss-in-Boots delivered a deliberately provocative and economically senseless attack on what he described as the “unconstrained Anglo-Saxon market model.” Sarkozy sees the appointment of Michel Barnier as EU financial regulation supremo as a “victory” for France; he expressed himself in those exact terms:
“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."
Neither economic model actually exists beyond the confines of Sarkozy’s populist Gaullism, the differences between Paris, Frankfurt and London are in volumes and preferences. But, that does not make the danger to the City any less real, as Alistair Darling argues in this morning’s Times. His point is that diminishing London will diminish Europe:
‘In the forthcoming reform of hedge funds, private equity and derivatives, José Manuel Barroso, the European Commission President, and Mr Barnier will be mindful that Europe is not competing with itself, but striving for global excellence.
It is too simplistic to argue that financial centres in Europe are just competing among themselves. The reality is the real competition to Europe’s financial centres comes from outside our borders. And that London, whether others like it or not, is New York’s only rival as a truly global financial centre.’
EU finance ministers must heed Darling’s warning, and Sarkozy should spend more time copulating and less time playing politics with global recovery.