City fears a distracted UK government may be unable to fight EU regulation
FEARS are growing in the City that a weakened UK government may not be able to fight off strict European Union proposals to regulate the financial services sector.
The UK government, led by chancellor Alistair Darling, has spent the last few weeks battling plans for the European Central Bank to take charge of a new a pan-European financial stability regulator.
But City figures are concerned that Labour party leadership infighting over Prime Minister Gordon Brown and the expenses row has distracted the government.
Several senior figures in the City have told Morning Wire they are worried the Treasury has been distracted over these major issues because of internal government wrangling.
The government is also jockeying for position over the allocation of economic portfolios at the next European Commission, which could come up as early as this autumn.
The UK currently holds the trade portfolio, and there would be worries if France won a portfolio with direct influence over financial regulation.