Well, the cat really is out of the bag. Like closet athiests in the 17th century wondering behind closed doors, away from the ears of the priests, whether God really exists, so British political leaders have long wondered behind closed doors whether the French and Germans really do want to take control of the City. It's the crown jewels of the European economy, and they want it, was the secret fear. No mainstream politicians ever dared say it in the open, although many thought it. Whispering quietly, ministers have said to me that they believe the French are determined to do down London.
One very senior French financier now based in London once came to me and asked why the British couldn't see what was happening – it was called Project Spartacus, and it was an attempt, co-ordinated across French government departments, to do down London and make Paris the financial capital of Europe. Because he was French, he spoke about it openly with French officials and ministers, but he said they never speak about it in public because the didn't want to arouse the British - although President Sarkozy occassionally let slip his ambitions. In the wake of the financial crisis, the French and Germans did in effect take control of regulation of the City away from the British government – there are now 49 different bits of financial services regulation coming from the EU to London, and pretty much all designed to clip the wings of the City. And last night we saw how much it really matters to France.
Faced with a choice between an EU treaty to save the euro and retaining control of regulation of the City, President Sarkozy decided to retain regulation of the City. He said that he couldn't give it up because poor regulation of financial services had lead to the crisis in the first place. But it really shows how much he values his new found control over the City. If countries are secretly persuing their own national ambitions at the expense of their partners, it really does raise serious questions about the sort of club we are in. Relations between Britain, France and Germany have been getting worse since the euro crisis began, but they are plunging to new depths. The French and Germans will do everything they can to blame perfidious Albion for their failure to agree an EU treaty to save the euro (instead having a very awkward intergovernmental agreement among 26 or slightly fewer countries). But the treaty was theirs if they agreed to give the UK the protection it wanted for the City – but for them, that was a price to high to pay.