We need to keep in mind that the break-ups of ING, RBS, etc. are driven 100% from Brussels. The EC Commission has exclusive competence to rule on State aid cases and the Member States have to comply. It is another thing that the EC officials and their Member State counterparts may choose to “market” a EU state aid decision as a “national policy move” rather than something imposed by EU competition law. The Brown Government does probably not need another case of the EU driving “UK” policy after the debacle with the Lisbon Treaty.

The UK “U-turn” is thus rather the EU doing what it is supposed to do much more than Alistair Darling coming up with something new. This most recent development of course puts the wisdom of the UK Government’s decisions on RBS and Lloyds from a year ago into question since EU state aid law is relatively easy to predict.