The City of London could find itself at the mercy of the European Parliament  The Euro-MPs in charge of drafting the rules for oversight bodies covering banking and markets aim to make it much harder for Britain or other states to use an "emergency brake" to block decisions on regulation, and perhaps to strip them of their veto altogether.  Alistair Darling, the Chancellor, thought he had secured a safeguard clause in a deal with fellow EU ministers late last year. The agreement stipulates that states can take their case to the European Council - the supreme EU body made up by heads of government - where decisions are taken by unanimity, if they think that a ruling by a trio of EU supervisory authorities "impinges on in any way on the fiscal responsibilities of the member states."  That is not end of the matter, however, since the European Parliament has broad legislative powers and can rewrite the text. All the major blocs in the assembly vowed last November that they would not agree to "water down" the original plans for the new bodies, which are to have "binding powers" to impose decisions.  Sven Giegold, a German Green MEP and 'rapporteur' in charge of markets regulation, said the veto on fiscal matters is so vague and sweeping that it enables states to block almost anything. "A European supervisory system in which each government could veto decisions would be rather silly. This veto - as defined - has to go," he said.  While the drafting process is confidential, it is understood that the Spanish 'rapporteur' in charge on banking regulation, also favours limiting the veto.  The Parliament is drawing up its version for a planned 'First Reading' by early summer. If the text clashes with Mr Darling's Council version - as it undoubtedly will - the two sides must thrash out a final compromise.  Mats Persson, director of the think tank Open Europe, said the move by Euro-MPs to unpick Mr Darling's deal is a threat to Britain's financial industry. "If MEPs manage to win support for this plan, it will add further momentum to what is already a significant transfer of powers from national regulators to the EU level. These plans will leave the UK Government completely without safeguards against proposals which could hurt the City of London. Crucially, accountability will fall into a black hole between EU regulators and the states. If the crisis taught us anything, it is the importance of holding both regulators and finance ministers to account," he said.  Mr Persson added that even if the veto survives for "crisis decisions" the proposals still allow the three regulatory bodies to make binding decision on day-to-day matters by simple majority vote (SMP), with an appeals process also by majority vote. Whatever happens, the EU apparatus will have the final say on how the City runs itself, ending a 300-hundred year tradition of self-rule at a single stroke.  Peter Skinner, a UK Labour MEP drafting a report on the insurance part of the three-legged structure, said he doubted that matters would ever reach the point where Britain would be overruled, adding that it would be absurd if a majority of states with no real financial industry were to impose decisions on a global financial hub such as London.  Mr Skinner is pushing for a system that gives the Financial Service Authority and other regulators a stronger say, but ultimately the conclusions of all the MEPS involved in the process will be moulded together into one position that must reflect the will of European Parliament. That body is in no mood to do favours for Britain or the City of London.
Key members of the European Parliament are drawing up plans to whittle away    Britain's power to veto decisions by the EU's new apparatus of financial    super regulators, a move that may leave the City of London without defence    against threatening proposals.