According to the paper:
Nicolas Sarkozy is planning a massive expansion of the business district on the north-western edge of Paris to challenge the City of London as Europe's pre-eminent financial centre. In spite of his tirades against financial capitalism, Mr Sarkozy wants a bigger slice of the business.
The blueprint for La Défense - which includes several spectacular skyscrapers and, eventually, a further 1m sq m of office space to the west of the arch - lies at the heart of Mr Sarkozy's plans for le Grand Paris : a vast programme of infrastructure improvements and governance reforms that he hopes will turn Paris into Europe's economic powerhouse.
The French government is intent on taking advantage of the City's woes and its battered reputation to turn Paris into a competitive financial centre. 'It is clear today that the City is in great difficulty and that is an opportunity for France to reinforce its financial attractiveness," Patrick Devedjian, the minister in charge of La Défense expansion, said last month. His ambition was to turn La Défense into a "great financial centre, rival to the City of London.
French politicians and financiers have long supported regulatory harmonisation inside the European Union as a way of levelling the playing field with London. With the crisis sweeping aside political resistance, especially in the UK, they are closer than ever to getting their way.
French bankers are counting on EU rules on bank capital requirements to end what they see as the advantages afforded to British banks under existing UK definitions. France is also clamouring for an EU clampdown on hedge funds, which many in the industry in London regard as a protectionist onslaught against funds based offshore or in the US.
We just hope the Treasury have read their pink pages today.
After the Lords EU Committee criticised the Government for being "behind the ball game" in the ongoing negotiations on the proposed regulations in Brussels, it is increasingly felt that the Government simply isn't doing enough to fight the potentially damaging regulations coming from the EU.
Regarding the proposed regulations for hedge funds and other investment funds, for instance, in its recent White Paper on financial regulation the Treasury sounded about as tough as a bag of marshmallows:
"at the EU level, the European Commission published a proposal for a directive on Alternative Investment Fund Managers on 29 April 2009. The Government welcomes the Commission’s attention to this important issue and supports the principle of a coordinated EU approach to hedge fund regulation as part of a broader international effort. However, we believe that the proposal, which was produced in a very short time and with no public consultation, requires significant improvement. The Government will engage positively in the EU debate with the aim of developing a directive that achieves the necessary improvements in the EU regulatory framework, without imposing unnecessary burdens."
Gosh - watch out Europe!
The Government also fuelled fears this week about the proposals for increased EU supervisory and regulatory powers for EU bodies. Lord Pearson of Rannoch received a worrying set of answers from Lord Myners, the Financial Services Secretary to the Treasury, when he asked for clarification about the plans:
To ask Her Majesty's Government... whether they foresee overall control of the United Kingdom's financial system and its supervision resting with the European Union or with Parliament.
Lord Myners replied:
The European Commission has confirmed that day-to-day supervision of financial institutions should remain at the member state level.
(Lord Pearson): To ask Her Majesty's Government... whether they have power to prevent overall control of the United Kingdom's financial system and its supervision passing to the European Union; and, if so, whether they will exercise that power.
(Lord Myners): The European Commission has indicated its intention to use Article 95 of the EC treaty as the legal basis for its proposals to establish a European System of Financial Supervisors. The European Commission has confirmed that day-to-day supervision of financial institutions should remain at the member state level.
Day-to-day supervision? What does that mean? Doesn't sound much like power or control to us. It's like the Chief Executive of a company being told by the Board that that they're in charge of the daily machinations of the office, but the real power - the decision-making - lies elsewhere. Great.
It's clear we need a much tougher approach. In fact, going back to the grand ambitions detailed in the FT today, as we wrote recently, the Government could learn a thing or two from the French approach to EU negotiations. Earlier this week, French Foreign Minister Bernard Kouchner said in a speech to Polish ambassadors:
"In Europe, I have learned something - I should say that with President Sarkozy it is quite easy to see - you have to be determined, solid, a little bit demanding."