A combative cloud hung over Anglo-French relations Friday after French President Nicolas Sarkozy abandoned a London visit in which he was to calm concerns over interference in London's prized financial services sector by a new French-born EU policymaker.
A cross-Channel spat has been brewing all week – with the British saying their supposedly "light touch" financial services industry may come under excessive Gallic-style regulation, and Sarkozy boasting that he wanted to see the "European model" triumph over "the excesses" of capitalism.
Yet despite invocations of Waterloo, Sarkozy's impolitic words, and the failure of the Friday visit to materialize, the dispute may relate more to shaping domestic political advantage ahead of elections next year in both countries than serious quarrels over guiding European Union financial policy.
The row is also being portrayed as part of French plans to try to build up Paris as a financial hub at London's expense.
" 'Sarko' is not well known for his restraint," says Giorgio Questa, a professor at London's City University, "and [Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling] are trying every possible populist sound-byte to avoid defeat in next year's general elections."
Sarko speaks his mind
After the reshuffle of the European Commission's "cabinet" led to Michel Barnier, a former French agriculture minister, securing the powerful internal market portfolio, the famously outspoken French president told Le Monde last weekend that "the British are the big losers in this business."
Unable to resist again on Monday, President Sarkozy told an audience in the south of France: "Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?"
The remarks sparked five days of headlines in Britain, customarily name-checking historic Anglo-French battles and giving voice to concern about greater European interference in London's money industry.
The irony, say analysts, is that it has been Britain's Labour government that has sounded the death knell for the low-tax environment in which that industry has flourished.
"Mr. Barnier is also not France's representative on the European Commission. Legally, it's not a gray area. Individual commissioners do not pursue the national policies of their country."
Nevertheless, the fallout in Britain from Sarkozy's remarks has had a high profile.
Chancellor Darling was compelled to respond Tuesday with an article in the Times in which he warned the French against meddling with the City of London, the country's financial heart.
He also pointed out that French and German banks were among the biggest creditors of the failed American insurance giant AIG.
Angela Knight, the chief executive of the British Bankers' Association, told fellow bankers: "President Sarkozy must surely recognize that he has undermined the EU with his statements and put a question mark over the impartiality of his nominated commissioner that will not be easily dispelled."
Why no visit?
There was confusion Friday over why the French president's visit had been cancelled.
While the Times reported he had snubbed Mr. Brown in favor of a long-standing engagement with the President of Benin, The Telegraph claimed Sarkozy had hoped to meet Brown at 10 Downing Street, but the prime minister declined to rearrange planned engagements to accommodate him.
"We didn't really want to be up all night dry-cleaning the Tricolor for him," it quoted a British diplomatic source as saying. "They wanted to visit, but it was too much trouble."
But away from the public eye, many accept that Sarkozy's boasts may have other sources.
The president, a notable advocate in the past of shaking up the French economy with British and American-style liberal market reforms, knows that bashing "Anglo-Saxon capitalism" goes down well at home ahead of important regional government elections in the New Year.
The spat has also been useful to the British as well, some say.
"Let us not forget that the British banking disaster has significantly endangered London's role in global finance," Professor Questa says. "The hostilities against banks were opened by Brown-Darling, who tried to sound populist and to obfuscate the fact that under their watch, banking regulation was emasculated."