LONDON: New European Commission President Jean-Claude Juncker unexpectedly handed Britain supervision of EU financial services on Wednesday, offering an olive branch to a country that is weighing its future in the bloc.
Juncker, whose appointment to head the European Union's executive was strongly opposed by British Prime Minister David Cameron, said Jonathan Hill will become the European Union's first dedicated financial services commissioner, giving him huge influence over the City of London and rivals Paris and Frankfurt.
Observers had expected Hill to have a junior role in energy. Cameron's spokesman said the appointment of Hill, who was leader of
Britain's upper house of parliament, the House of Lords, will ensure that the voice of EU members from outside the euro zone will be fully represented in the bloc's wider single market.
"Financial services is a very significant sector here in the UK so we welcome that and look forward to working with Lord Hill and the entire Commission-designate," the spokesman said.
London is the 28-country bloc's biggest financial centre. Britain, one of the most Eurosceptic countries, has become more antagonistic towards Brussels as supervision of banks and markets shifts increasingly to the EU level.
This loss of national power has fuelled a surge in support for British anti-EU party UKIP, prompting Cameron to promise a referendum on membership of the EU in 2017 if he is still prime minister after national polls next year.
"It's a very good appointment for the City," said Chris Cummings, chief executive of TheCityUK, which promotes Britain as a financial centre.
"In the context of British membership of the EU, it demonstrates that other member states are keen to listen to the reform perspective Britain has put forward," Cummings said.
Cameron has urged the EU to push harder for economic growth as the euro zone, Britain's biggest export market, stutters.
Simon Lewis, chief executive of the Association for Financial Markets in Europe, a banking lobby, said Hill's appointment recognises the importance of Europe's capital markets at a crucial moment, as an unprecedented array of new regulatory measures reach the implementation phase.
Britain's opposition Labour party said Hill cannot be commissioner just for the City of London but for all European citizens who still feel shockwaves from the financial crisis.
Hill faces a tough hearing in the European Parliament which is keen to keep cracking down on bankers.
"I don't know if it's a joke or a provocation. This is unacceptable," said Philippe Lamberts, co-leader of parliament's Green bloc, said.
"Juncker wanted to offer a present to David Cameron to help prevent a Brexit (British exit). Who is Lord Hill? His background is lobbying and he has no known competence in the subject matter and that's a wrong message," Lamberts added.
Hill will oversee the euro zone's new banking union, which may irritate lawmakers from the currency area. Britain has challenged an EU cap on bankers' bonuses mostly affecting those working in London in the bloc's top court.
But Hill will have to defend EU rules as part of his job. He will also effectively report to more senior commissioners who could stamp out any attempts to go soft on finance.
OLIVE BRANCH Hill, a public relations consultant and former chief of staff to former UK prime minister John Major, will oversee one of Juncker's core projects: to create a capital market union that will expand areas such as asset-backed securities to fund economic growth as banks regroup after the financial crisis.
His remit will help ease growing concerns in the City that the euro zone countries will call the shots from November under new EU voting rules which will give the currency union a ready-made qualified majority to push through pan-EU laws.
In addition, the bulk of lawmakers in the new European Parliament's two main parties the centre-right EPP, which Britain's Conservatives have quit, and the socialists are drawn mainly from euro countries like Germany, Italy and Spain.
Also from November, the European Central Bank becomes the direct supervisor for the euro zone's biggest banks, which represent the bulk of banking assets in the EU, giving it enormous clout in financial policy and rule making.
While the EU has approved the bulk of new regulation since the 2007-09 financial crisis forced European taxpayers to prop up banks, many of the rules have yet to be fully implemented.
Controversial legislation still remains to be approved. After Cameron's failed attempt to stop Luxembourger Juncker, the City worries that Britain's influence in Brussels has weakened.
"This is a significant economic portfolio -- particularly given President Juncker's pledge to create a capital markets union," said Simon Walker, director general of Britain's Institute of Directors, an industry lobby.
"Entrusting this commitment along with financial services to a UK Commissioner is a clear demonstration that British influence in Brussels is far from waning," Walker said.
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