Brown fights off EU regulator

Gordon Brown fought off EU demands for a new European regulator that could instruct the UK what to do, the Guardian reports.

"The European Council stresses that decisions taken by the European System of Financial Supervisors should not impinge in any way on the fiscal responsibilities of member states," the summit decided.

The prime minister made it plain that he supported the attempt to establish more stringent Europe-wide regimes for policing the banking, securities and insurance sectors. But he rejected the commission proposal that would empower the European authority to order, for example, a bank bailout in Britain or the Treasury having to recapitalise a financial firm.

"European action must be practical and it must be effective," Brown said. "It is only logical that where a supervisory decision would have an impact on the taxpayer that the decision should be for the relevant national authority."

Under the Brussels draft, the new regulator would have been given the power to arbitrate in a dispute between EU countries over a cross-border bank. If the sides could not agree, the new regulator would have been able to impose a decision that could have a fiscal impact on the countries concerned.

Brown supported a new European Systemic Risk Council of central bankers and officials in charge of monitoring financial stability across the EU, but said the question of who should chair the new council was still open. Most of the other Europeans want it to be chaired by the president of the European Central Bank.

Supporters of the new regime say the regulator will be toothless unless it can dictate decisions as a last resort. Brown was in a minority on the issue, with France leading the charge to push through the tougher commission version.