European Affairs

I do not accept that we are isolated, certainly not on the basis of the discussion that I had at the European General Affairs Council yesterday. There might be some confusion in the right hon. Gentleman's mind. What I am talking about here are the Larosiere regulatory and supervisory proposals. There are separate proposals in respect of so-called hedge funds, which are being discussed on a different track and will not be discussed this week. They are at a rather more preliminary stage. It might help the House if I just make the following point about the balance between international and national regulation and supervision. Improved regulation is essential if we are to keep up with the increased dynamism of international capital markets. That means introducing improved regulatory standards across Europe—an agreed rule book for financial regulation. However, this Government believe that micro-prudential supervision—in other words, supervision of individual companies—must remain at nation state level.