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The French are Coming, and not by Sea

At a crucial moment during the Napoleonic Wars, Admiral John Jervis, first Earl of St. Vincent, famously wrote in a dispatch, “I do not say, my Lords, that the French will not come. I say only they will not come by sea.” Over 200 years later, St. Vincent’s prediction is coming true: the French are coming to sack and burn London, and they aren’t coming by sea. A report in the Financial Times notes that London’s all-important banking sector is increasingly coming under fire by new EU regulations driven by the powerful Franco-German axis:

Myriad Brussels proposals have left Britain’s financial world reeling. Ministers see many measures hurting the sector or crimping UK regulatory powers. That nervousness – or unfounded paranoia, as critics see it – has burst into the open, with David Cameron recently describing the City as “constantly under attack”. For the prime minister – and figures from the UK’s financial industry – the problem is not one single issue nor even a few misdirected proposals but rather a deeply worrying trend. “Red tape, ill-informed tax initiatives, protectionist policies and high ‘pass on’ costs will damage the international reach of the City,” says Anthony Belchambers, chief executive of the London-based Futures and Options Association.

As Britain’s largest export, the financial sector plays a central role in the country’s economy, explaining London’s horror at the new regulations being proposed. While no one measure is an existential threat to London’s financial dominance, the trend is clear: continental Europe wants to call the shots on financial regulation on all of the EU’s banks — even those in perennially Eurosceptic England. Already some British banks are being courted by Frankfurt and Paris, and as the EU is poised to implement a standard set of rules everywhere, many are questioning the benefits of remaining in expensive London.

While many continental powers profess to see these new regulations as innocently technocratic and unbiased basic protections against the excesses which led to the current financial crash, to the British this is no less than a direct attack on their economic crown jewels. The power of the City and Canary Wharf banks are the last remaining source of London’s status as a world city and are the country’s chief moneyspinner.  The UK is a bit like New York; the loss of all its other industries means that finance is more crucial than ever.  Even British socialists turn pale at the thought of losing the tax base that the financial industry provides; no City, no welfare state.

Now the Cameron government finds itself in an extremely difficult situation. Britain has never been able to crack the Franco-German alliance at the heart of the modern European project and has always been on the outside looking in when the big decisions were made.  The Franco-German alliance is tightening in the face of the eurozone threat, and with countries like Italy, Greece, Portugal and Spain increasingly dependent on France and Germany for economic support, the power of that alliance within the EU is at its highest point in decades.

Attacking the London financial industry is something that, for slightly different reasons, both the French and Germans would very much like to do.  Prime Minister Cameron is likely to find his own country united behind efforts to protect the City, but safeguarding British interests in the maelstrom now engulfing Europe is going to be very hard.

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  • DaveZ

    Hello Dubai!

  • Eurydice

    It’ll be interesting to see what happens to the Franco-German alliance once France starts looking for a bailout.

  • Richard F. Miller

    For the British, EU membership is something like the famed Roach Motel of old: they get in but they can’t get out. The EU was sold to the British public as a “What could possibly go wrong?” measure.

    I’ll let British subjects answer that question, but the recent vote by the Commons, refusing to place on a ballot the question of continuing EU membership, suggests one possible answer.

    British elites, like their continental counterparts, seem wedded to this arrangement, and no amount of self-immolation will persuade them otherwise.

  • dearieme

    We must leave the EU. Simples. It might be wise to bring our troops home from Germany first. Best to avoid hostages to fortune, or unfortunate misunderstandings, I think.

  • Neville

    This is surely a replay of precisely the same strategic issues faced by the UK in relation to the European continent for many centuries, and an endorsement of what was previously always Britain’s core policy: prevent any sort of united government emerging in Europe by striving to maintain a ‘balance of power’.

    As soon as a coalition is able to dominate Europe, the UK’s only choice is ‘out’ or ‘in’. If it’s ‘out’ then Britain faces through trade and regulatory barriers effectively the same sort of ‘Continental blockade’ as was imposed by Napoleon (to which its only response was a long and hard-fought all-out war). If it’s ‘in’ then the UK gets to be informed what economic activities it can engage in, and has to put up with being told ‘nice banking industry you have there, we’ll be taking that with us to Frankfurt and Paris’.

  • Toni

    “continental Europe wants to call the shots”

    The sentence could have ended there. The EU’s technocratic elites have been bent on Euro-domination since the start of the project. Just like Progressives on this side of the pond, their answer to failures of government is more government. If they’re granted more power over citizens and their institutions, they always claim, they will apply their technocratic solutions and fix this problem.

    The next problem–unforeseen, of course, by the technocratic elites–becomes their next excuse to argue for more power over citizens and their institutions.

    I’m thankful this side of the pond has a strong contingent of citizens and principled politicians who stand for smaller government and more freedom. Someday Prof. Mead may even notice that the historic Republican Party has a valuable and virtuous core.

  • Jacksonian Libertarian

    The forces tearing the EU apart are far stronger than those holding it together. I am reminded of cartels like OPEC, they work fine when times are good, but the moment things get tough they all start cheating. The Brits aren’t idiots, they know the French and Germans and all the rest are going to try to cheat them.

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