David Prosser: Sarkozy savours his sweet victory

Outlook You have to hand it to Nicolas Sarkozy. While most of Europe has been pussy-footing around last week's appointment of Michel Barnier, a Frenchman, as EU commissioner with jurisdiction over the City of London, France's President did not try to hide his delight. "I want the world to see the victory of the European model," Mr Sarkozy said yesterday. "[It] has nothing to do with the excesses of financial capitalism."

Still, while admiring the President's chutzpah, where has he been during these past three long years? The first evidence of credit crunch contagion on this side of the Atlantic came at BNP Paribas, very much a French bank. Leading victims of the financial crisis have included Holland's ABN Amro (which brought down RBS), Belgium's Fortis, Switzerland's UBS and Germany's Hypo Real Estate. The crunch has not purely been a phenomenon of the Anglo-Saxon business model of which Mr Sarkozy is so critical.

By contrast, two types of business that one does characterise as Anglo-Saxon – private equity and hedge funds – have generally not been damaged in the same way as Europe's banks. And they have never posed serious systemic risk.

Despite this, both sectors – mostly based in London – are threatened by regulation currently being worked on in the European Commission, and backed by Mr Sarkozy. The appointment of Mr Barnier may herald more such threats in the future, if the City's worst fears come to pass.

Many believe that Mr Sarkozy is less interested in the philosophical debate about the extent to which capitalism must be fettered than in seeing Paris win market share from London. If so, his tactics smack of exactly the kind of rapacious capitalism he professes to despise.

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