Osborne to back EU banking controls
Chancellor George Osborne is to endorse sweeping European supervisory powers over banks and financial institutions in response to the economic crisis.
EU finance ministers meeting in Brussels are set to approve three new pan-European watchdog bodies to oversee the banking, insurance and securities markets across Europe.
The aim is better coordination of national financial services watchdogs as an early warning signal of any future economic disasters.
Mr Osborne has backed the move since taking office, insisting that the new system will still leave day-to-day financial supervision within the UK in the hands of national authorities.
But Open Europe, campaigning for EU reforms, said the plan represented a clear shift in power from the UK, giving EU officials a mandate to "interpret, apply and even enforce EU laws at the expense of national regulators", according to Open Europe director Mats Persson.
Unveiling a new Open Europe report which warns of a risk to the City of London, Mr Persson said: "This proposal is moving substantial control over financial services away from national authorities and governments. Once established, the EU supervisors are likely to extend their powers incrementally, since the proposal is designed to allow for more and more laws to come under their authority. While a single rulebook could benefit the City of London, the voting arithmetic within the supervisors leaves the UK in an unusually weak position to block unwelcome proposals. This, in turn, could expose the City to interventions from countries which don't share the UK's view of financial markets."
But a Government spokesman insisted the new supervisory arrangements were "a good deal for us", adding: "We are happy with this. Once it has been agreed by finance ministers, the technical details will be sorted out by national officials later this week or next week.
"But day-to-day supervision (of British banks and financial institutions) remains at national level - that is what we have said all along."
Mr Osborne and his colleagues will also discuss another post-crisis plan to tighten control on banks - a possible EU-wide levy on all finance houses to go to a central pot to fund any future wind-up of failing institutions, avoiding any repeat of the financial fall-out being absorbed by customers.
Mr Osborne has already announced that he will introduce a British levy at the start of next year, but with the proceeds going into general UK Treasury revenue.