According to new reports in the Financial Times, Gordon Brown may have unwittingly dealt an irreparable blow to Britain’s financial services industry, and the full effects of this are only beginning to be felt three years later. Brown deserves a lot of credit for holding fast against Tony Blair’s eagerness to join the eurozone, but in 2009, he wrongly focused on ensuring that a Brit, Catherine Ashton, was appointed Europe’s foreign policy chief. While this was going on, he let the job of top EU financial regulator go to Michel Barnier, a Frenchman who has since made a lot of enemies in London, where many feel that he is bent on curbing the City’s advantage as the financial center of Europe. As the FT puts it:
“Failing to secure that post for a Brit was probably the biggest single error in European policy for a decade,” said one UK Treasury insider. . . . British officials privately believe Mr Brown made a major mistake lobbying for the foreign policy portfolio, rather than pushing for a Briton to oversee financial services.
Led by José Barroso, the EU Commission’s president, talks were started last winter to initiate a possible job swap between Barnier and Ashton in order to win David Cameron’s support for the new EU fiscal treaty. Unfortunately for Britain’s Treasury and for the City of London, it does not look like Brit will get the crucial post anytime soon. The plan to swap Barnier for Ashton has fallen by the wayside because of concerns that the EU parliament would vote it down.For the time being, at least, London will have to live in fear of losing its place as the financial heart of Europe.