Senior bankers in Frankfurt, seat of the new European Central Bank, admit that London will continue to be Europe’s leading financial centre and stands to reap many of the benefits of the new currency. “Trade in stocks, bonds, derivatives and foreign exchange will be centred in London,” admitted Hans-Georg Engel, a director of JP Morgan in Germany. “The positive effect of the euro on turnover and employment in Frankfurt has been small.”
Another leading German banker admitted: “The euro will help us outpace Paris, but we will not catch up on London.”Deutsche Bank and Dresdner Bank have enlarged their trading facilities in Frankfurt to cope with the massive new euro-denominated government bond market. It will be 20 per cent larger than the US Treasury market at the outset and rise by a further 20 per cent should the UK, Denmark, Sweden and Greece join.However, there has been little or no transfer of capacity from London to Frankfurt among the non-domestic banks who dominate the German finance markets. On the contrary, a recent survey of these banks reveals that many had slimmed down in Frankfurt following losses in the Far East and are concentrating trading in London. Many second-tier banks retain only small sales and marketing operations in Frankfurt.Above all, the leading US investment houses such as Morgan Stanley Dean Witter, Goldman Sachs and Merrill Lynch remain firmly entrenched in London, although they do have a strong presence in Frankfurt.Amelia Fawcett, managing director of Morgan Stanley Dean Witter, said: “There is no compelling reason why euro business should be transacted in Frankfurt rather than London. The Fed sits in Washington and the T- bill is traded in New York.”Ms Fawcett said various factors would enable London to retain its superiority “unless the UK is out of the euro for a long period”.

Far from objecting to “the very idea of Europe”, I think those European countries that have not gone through the process of Thatcherisation (in which Lord Gilmour was an early casualty) and which have, unlike this country, political institutions of little proven historic value, should federate at once and not risk the future of this noble Euro-federal experiment with a roll of the dice of monetary union.What I seek is not “disengaging as far as possible from Europe” or subordinacy to the United States but continuation in the Common Market which the British people voted for. He dismissed the “special relationship” of the UK with the United States as “a myth” which apart from assistance during the Falklands war has brought Britain “only a certain amount of deserved contempt from other countries”.
In fact, none of my political or economic views would qualify as “extreme”, other than to those helplessly addicted to the European policy which Lord Gilmour so admires of subsidising indolence by paying back-breaking amounts of Danegeld to the urban welfare class and the uneconomic small farmer. He suggests that 40 million Americans would not receive medical care if they needed it and implied that the fact that the United States spends a greater percentage of GDP on medical care than any other Western country merely enriches the insurance companies without adequately serving the health-care needs of the nation. Thus he claimed that “France’s GDP per capita is virtually the same as America’s” and in the United States “the richest 1 per cent of American households own nearly 40 per cent of the country’s wealth and the richest 20 per cent own nearly 80 per cent of it”. Lord Gilmour wrote that I seem “to admire the recent foreign policy of the United States” and he imputed to me generally “extreme right-wing political and economic opinions”, and offered the usual Americophobic condescensions of the more lobotomous Euro-fanatics. an appendage to the United States” because my views (and Mr Murdoch’s, but he can respond for himself) are “essentially North American” as we seek “to push Britain out of Europe” and have little concern for “Britain’s national interests” but are entirely self-interested. He accused me of desiring this country to become “a satellite …

What’s needed is an installation consisting of a pickled phallus, in a simple glass case, by the artist Damien Hirst.. IN THIS newspaper last week Ian Gilmour imputed to me a good many opinions and motives that I do not hold in the midst of a particularly excruciating version of the usual farrago of Euro-enthusiastic myths I was accused of raising with Rupert Murdoch “stridently .. [a] frenzy [about] the very idea of Europe”. Such theological questions are beyond the scope of this column, but I think I’ve solved the problem of an image to sum up British foreign policy in the late 1990s. The words of an old song, “Never on Sunday”, promptly came into my head, along with a niggling doubt as to whether there is Scriptural authority for bombing people during Advent. Last week it emerged as a central tenet of the Pax Clintoniana, when the two governments earnestly explained that the timing of the air strikes was decided not by Mr Clinton’s domestic problems but a desire to complete them before the start of Ramadan.