Snarky Sarko taunts City over new EU ‘supervisor’

The fall-out from the Labour government's campaign to snare one of the top jobs in the new EU commission continues after French president Nicolas Sarkozy suggested that the British had been "big losers" in the latest carve-up of European posts.

After months pushing Tony Blair for the new post of EU president, prime minister Gordon Brown eventually had to settle for a Brit getting the lesser post of high representative for foreign affairs, which went to the virtually unknown Baroness Ashton.

Then last week it was announced that Michel Barnier, a member of Sarkozy's UMP party, and a former foreign minister who has in the past called for stricter financial regulation, will be the next Internal Market Commissioner, putting him in charge of supervising the City of London.

On Friday, Sarkozy, who earlier this year criticised the "Anglo-Saxon" economic model for its part in the financial crisis, told Le Monde that in snatching the job, the French had engineered a spectacular coup. Barnier will be in charge of setting EU policy on financial reform - including new rules for hedge funders - in the wake of the credit crunch, and City bigwigs fear the appointment heralds a new era of regulation for London's financial services.

"It's the first time in 50 years that France has had this role," Sarkozy boasted to Le Monde. "The British are the big losers in this business... It's not that they were hesitant [about Barnier's appointment]: they were absolutely against it."

Barnier takes over from Irishman Charlie McCreevy, who is seen by observers as having been very much against regulation.

Angela Knight, chief executive of the British Bankers' Association, voiced her concerns at Sarkozy's taunt. "I share concerns that the UK doesn't have an economic commissioner given the importance of the City, and these remarks are not a happy thing when we are all in the same EU and we are all at the end of the recession," she said. "The recovery is going to require positive attitudes."

Barnier himself sought to calm City nerves today, telling Europe 1
radio: "I know the importance of the City... It's not my job to be nice or nasty. I have to work in Europe's interest to draw lessons from the crisis, including in the City's interest to support this financial centre, as well as others including Frankfurt and Paris."

But Barnier won't have a totally free hand in his new post. In a move clearly meant to allay British fears of a French-led regulatory pillaging of the City, European Commission president Jose Manuel Barroso is expected to make Jonathan Faull, a Briton who is currently head of the EU's Justice, Freedom and Security department, Barnier's director-general. ·