How Brown was outfoxed by Sarkozy over Square Mile

London is paying for one of the most serious political failures of Gordon Brown's premiership.

Two years ago Mr Brown allowed a Frenchman to seize control of City regulation for the first time in 50 years. "We were done over - comprehensively," was the private verdict of a senior Labour politician who was close to the shambles. "The French stuffed us." He predicted a millstone of regulations within three years. It has not taken that long.

The inside story is a cautionary tale to David Cameron. In 2009, Britain and France both wanted the key post of EU financial services commissioner.

In typical Brussels horsetrading, the impasse would have been solved by letting a small nation scoop a bonus. Nicolas Sarkozy's genius was to convince Brown the nondescript new position of High Representative for Foreign Affairs was more prestigious. Brown took the bait, and Sarkozy got what he wanted: former French foreign minister Michel Barnier was given the financial services brief.

Turning back the clock will be hard. But there are signs that party leaders are at last feeling brave enough to champion the City in public again. The Prime Minister called London "a key national interest that we need to defend". Nigel Farage, a former metals trader, told the Standard that Ukip would put the City at the heart of its London Assembly campaign.

A decade ago thriving Anglo-Saxon capitalism could set its own rules. In the post-crunch era, it needs public support. There has been a reluctance by politicians to hug City bosses close because of their toxicity. So, a tip to the Square Mile: cut the silly bonuses and invest the savings in a decent PR campaign. Then maybe our biggest industry will get the backing it needs.