Sarko Bonaparte flaunts single marts win
LONDON: The new French single markets commissioner won’t wreck the City of London, but it’s good trade for Sarkozy.
Who could disagree with Sarko? The crisis of the past two and a half years was indeed caused by what the French president, Nicolas Sarkozy, called “the excesses of financial capitalism”. When he talks about Anglo-Saxon capitalism we all know what he means.
Too much speculation. Too great a reliance on asset
bubbles. Too little focus on the real economy. Unless we want to live through ever more frequent and even more virulent bouts of turbulence, the excesses have to be tamed.
That applies in spades to Britain, where the economy has been grotesquely distorted by the size and power of the City of London.
In the illusory days before the crash there were only three engines of growth in the UK — financial and business services, consumption fuelled by property speculation, and public spending. In the long term, a recovery based on the return of business as usual is no recovery at all. If some of those outfits engaged in what Adair Turner calls “socially useless activities” decide that they want to up sticks for Zurich, good riddance.
The idea, though, that the appointment of the Frenchman Michel Barnier as the commissioner for the single market sounds the death knell for the City is for the birds. Bernier is not going to exact revenge for Waterloo, Agincourt or any of the other great battles conjured up in the past few days. Sarkozy is a smooth political operator; it is perhaps worth recalling that he originally marketed himself as a French Thatcher who would take the axe to all those Gallic restrictive practices and allow market forces to operate unfettered.
Sarkozy is positioning himself on the other side of
the barricade. He is Sarko Bonaparte taking the fight
to the bean counters of perfidious Albion.
Let’s be clear, though, he is not going drive through much-needed reform of the City. Indeed, his comments may hinder, rather than help, the cause of reform. For one thing, they were clearly designed for a domestic audience. Belgium and Britain got the high-profile posts in post-Lisbon treaty Brussels, but Sarkozy was at pains to show France had got the plum job.
Baroness Ashton, he was hinting, can go gadding round the world flying the European flag, but the real
power will be vested with Barnier. That’s probably true, but it is interesting that Barnier has quietly played down Sarkozy’s comments. He has no blueprint for
hobbling the City, and will rely on the co-operation of
individual governments for tougher regulation.
Second, Sarkozy has left himself open to the criticism that the European model has not escaped unscathed from recent events. The crisis has certainly exposed the fault lines in the Anglo-Saxon model, and it is telling that Britain is the only G20 nation still in recession. But French, German and Dutch banks were up to their eyeballs in all the esoteric financial products spun out of the US sub-prime market. The economic track record of the euro zone since monetary union is no great shakes.
The real reason Sarkozy’s remarks may prove deeply unhelpful is they force the UK government to go in and bat for the City. UK finance minister Alistair Darling has made it clear that while he is keen on a Europe-wide risk-spotting and standard-setting regime, he won’t allow Brussels to meddle with the City.
That’s just the sort of language the British Bankers Association want to hear.