City fears as Sarkozy hits out at Anglo Saxon model

Published on Tuesday 1 December 2009 20:39

FRENCH president Nicolas Sarkozy turned up the heat in the tensions over control of European financial markets yesterday with a triumphant message to his British and German neighbours.

The nomination of a French commissioner in charge of European Union markets will help continental economic ideals prevail over the discredited Anglo-Saxon model, he said.

Sarkozy blamed the reputedly free-wheeling model for the global economic downturn and hailed the appointment of Michel Barnier, a former agriculture minister in his government, as internal market commissioner.

The Group of 20 rich and emerging nations had made unprecedented strides during the crisis to regulate bonuses and eliminate tax havens, but the battle was not over, Sarkozy said.

"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]?" he said of Barnier's nomination.

"I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism."

Most continental European countries are seen as fiercer defenders of market regulation than Britain or the United States, which for Sarkozy are the typical "Anglo-Saxons".

Barnier, whose new role allows him to oversee a radical revamp of financial regulations to prevent any new economic crisis, has said he knows the importance of the City of London for growth in Britain and Europe. But he has also said that he will promote Frankfurt and Paris.

Some British financial services leaders fear that Barnier will push for stricter regulation at the expense of the City.

Bankers and politicians in London have also aired concern about France's tough stance on regulation, given their fight to water down proposed rules on issues such as bankers' pay and bonuses and curbs on hedge funds.

Playing down potential rivalries with Paris, Adair Turner, chairman of Britain's Financial Services Authority, told France 24 television he believed Barnier would work in the interest of all.