EU olive branch for David Cameron as Lord Hill appointed to senior financial services post

Lord Hill will be responsible for financial stability (EPA)

David Cameron’s hopes of winning a better deal in Europe for Britain were boosted today after Lord Hill, the UK’s new European Commissioner, was chosen for the key financial services post in Brussels.

But Lord Hill’s honeymoon lasted only a few hours, as Socialist and Green MEPs threatened to veto his appointment unless he promises to take a tough line on bankers’ bonuses.

In a surprise peace offering to Britain, Jean-Claude Juncker, the new European Commission President, nominated Lord Hill for a post which will give him huge influence over EU rules affecting the City of London. The Government was worried that Brussels would favour eurozone countries, aiding London’s rival financial centres in Paris and Frankfurt.

There were fears that Mr Juncker would deny Lord Hill the economic brief Mr Cameron sought for him in revenge for the Prime Minister’s strong public opposition to Mr Juncker landing the top Brussels job. His decision is a sign that he will work hard to keep Britain in the EU ahead of the 2017 in/out referendum Mr Cameron has promised.

The Prime Minister was delighted to see the financial services post went to one of the 10 EU members outside the 18-strong eurozone, which could allay fears that the single currency countries would impose policies on the others. George Osborne, the Chancellor, who is trying to lower EU caps on bankers’ bonuses, welcomed Lord Hill’s nomination as “great news” for Britain.

But the European Parliament, which will quiz Lord Hill later this month, has the power to block the new Commission team announced by Mr Juncker. Gianni Pittella, president of the Socialists and Democrats, the second largest group in the Parliament, said: “Financial services is too important and sensitive a job to be given to a conservative with a liberal, free-market approach. The financial sector urgently needs better regulation and we will not accept any backward step on this issue. It's a matter of principle. We promise to be very tough with Lord Hill."

Philippe Lamberts, leader of the Green group, said Lord Hill’s nomination was “a provocation” and “dead wrong”.

“On some issues the British have been at the forefront of properly re-regulating the financial sector," he said, "but in general they are in the camp of the softies; they keep doing the City’s begging.”

Mr Juncker echoed a sentiment often uttered by Mr Cameron when he said he was determined to make sure the EU did not meddle unnecessarily in national affairs.

“We want to show the European citizens that we have a Commission with its finger on the pulse of the bigger issues; we will be big hitters when we need to be big hitters, but we will hold back when we are talking about minor issues,” he said.

Mr Junker has implemented a “shake-up” of the European Commission structure, with new super-Commissioners overseeing key policy areas. These include two former Prime Ministers – Jyrki Katainen of Finland and Valdis Dombrovskis of Lativa – tasked with making sure the economics strategies of the bloc are appropriate and coordinated at a time when growth remains sluggish and unemployment stubbornly high in many countries.