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European Financial Services Proposals

Part of Oral Answers to Questions — Foreign and Commonwealth Office – in the House of Commons at 4:22 pm on 1st December 2009.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury 4:22 pm, 1st December 2009

For us, the red line applies to the fact that none of those authorities should have the power to make any impact on national Governments' fiscal responsibility. We do not believe that the fiscal safeguard should be used, because there is an overriding legal principle that the decision should not impinge on member states' fiscal responsibilities. Again, that will be part of the negotiations, and as I have said, many other member states share our concern, so we hope to be able to make progress.

Concerns have been expressed about the speed of reforms, and about the better regulation principles. We must ensure that there is better and more effective regulation, which is based on strong evidence, as well as thorough consultation and impact assessments. It is important to respond swiftly to the crisis and make sure that we can secure harmonised standards and put better regulation in place quickly, but that should certainly not be at the expense of high-quality regulation. It is more important than ever to ensure that our response is evidence-based and achieves the desired end. We continue to encourage the Commission to adhere to best practice and to conduct consultations and impact assessments on regulatory proposals for the regulation of markets and firms. That high-quality evidence base will also maximise the influence of the EU on the international stage with our international partners and better enable it to attain international regulatory convergence. It is crucial that better regulation principles are instilled in the bodies themselves. The Government have been arguing strongly for this in Council, and it continues to be a top priority.

Concerns have been raised about the Commission's role in determining a crisis situation. Alongside other member states, the UK is questioning the Commission's role in some areas of the proposals, including its ability to decide unilaterally where there is an emergency situation. We have already made progress on this issue and there is now broad consensus among member states that the Council should have a strong role in activating any emergency powers.

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