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Europe draws up the battle lines on financial regulation

It should come as no surprise that the European Commission will launch a bid to create a pan-European financial regulator. The abject failure of national regulators to prevent, predict or plan for the successive crises that have swamped the financial services sector over the past 18 months is an open invitation to a highly interventionist organisation like the Commission to step in.
It will be an interesting battle. Gordon Brown shows few signs of admitting that the system of regulation he put in place in the early days of the Labour government was deeply flawed. I have seen reports suggesting that the Prime Minister has "relaxed" his opposition to more Europe-wide regulation but I don't see that reflected in anything he says. At the weekend, he was critical of proposals - gathering pace on both sides of the Atlantic - to restore the split between retail and investment banking. It does seem that he just cannot bring himself to admit that anything he has done or supported in the past has been wrong.
He will oppose the creation of any pan-European regulator once it becomes clear that it wants to approach regulation in a different way to that he put in place in the UK. This will leave the UK very isolated as the rest of Europe sees our system as being the most deeply flawed which is why we have the most serious problems.
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