France has expressed concern that proposed EU reforms designed to avoid a British exit from the 28-member block will give London’s financial institutions an advantage over their eurozone competitors.

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EU leaders will meet for a crunch summit in Brussels on Thursday and Friday to discuss the draft proposal negotiated by British Prime Minister David Cameron earlier this month.

Cameron has made it clear he needs a deal sweet enough to sell to the British public, which is scheduled to vote on whether to leave or remain part of the EU in a referendum later this year.

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But the British leader faces last-minute wrangling amid concern in several European capitals that the draft deal features too many concessions to the UK, which already enjoys numerous privileges and exemptions within the EU.

While Eastern European countries are resisting a mechanism that would allow London to curb welfare payments for EU migrants, France – Britain’s traditional sparring partner in Europe – is more concerned about changes to financial regulations.

Officials in Paris are particularly anxious to ensure nothing in the deal would allow financial institutions in the City of London to benefit from less regulation than their counterparts in the eurozone.

The French government has repeatedly stated it does not want the UK to leave the EU – a prospect referred to as “Brexit” – but it is also wary of British attempts to unravel EU treaties.

After talks in Paris between Cameron and French President François Hollande on Monday, a source at the French presidency said there was “still work to be done [on the proposed EU reforms], especially on the issue of economic governance”.

‘Ambiguities’

French officials have complained that the wording of the draft text is ambiguous in matters relating to financial regulation.

“That part must have been discussed behind the scenes,” said Cathérine Mathieu, a specialist in the UK economy at the Paris-based French Economic Observatory (OFCE), noting that other issues in the draft proposal were addressed in much clearer language.

Last week, French Finance Minister Michel Sapin warned of “several ambiguities” in the text “that could allow one to think there may be a difference in treatment between London and the others”.

“That’s not possible,” Sapin told the finance commission in the French parliament. "Treatment has to be as identical as possible.”

The head of the French Banking Federation, Société Générale Chief Executive Frédéric Oudéa, raised similar concerns in a letter addressed to Hollande and Sapin earlier this month.

"If the plan is adopted in its current state,” Oudéa wrote, “it would put an end to fair competition between financial actors” and "create a risk of 'regulation at the lowest common denominator'”.

Oudéa warned that under the proposed deal, British banks would be protected from stricter eurozone regulations and yet still enjoy the same privileged access to the single-currency block as their continental rivals.

Two visions of Europe

Protecting the French and British banking sectors is not the only issue at stake, according to the OFCE’s Mathieu.

She told FRANCE 24 that the dispute between Paris and London reflected a fundamental disagreement about the role and scope of the European Union.

In Britain’s view, the EU is first and foremost “a free market that should not limit the sovereignty of member states”, Mathieu argued, adding that Cameron’s insistence on protecting the city from external regulation is “perfectly coherent with this approach”.

The French economist said it was “politically not an option” for the British leader to cave in to European regulation given the importance of Britain’s financial sector.

France, on the other hand, sees deeper integration within the EU as the best rampart against economic and political turmoil, and resents the UK’s go-it-alone attitude.

But without German support, it is the French who risk standing alone at the forthcoming summit, Mathieu warned, noting that several of the EU’s northern members have a more “Anglo-Saxon” vision of financial regulation.

On Wednesday, German Chancellor Angela Merkel said that many of Britain’s demands were “justified and understandable”.

Though she did not mention banking regulations, Merkel said she agreed that the UK and other non-euro states should have a say in matters pertaining to the single currency – a move opposed by France.

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