U.K. Challenges Draconian European Union Financial Regulations

Calls the restrictions "illegal" and a revolution by the back door

The Government has challenged new European Union powers to regulate financial markets as "unlawful" and an "institutional revolution" by the back door, during a legal challenge in Europe's Luxembourg court.

Britain has gone to the European Court of Justice to overturn powers allowing a Paris-based regulator to ban short-selling as part of a campaign of legal challenges to rein in growing EU powers over financial regulation.

The European Securities and Markets Authority, or Esma, was given the unprecedented powers to ban short-selling after Britain lost a battle to stop the move and was outvoted in a council of EU finance ministers last year.

Jemima Stratford QC, the barrister representing the Government in the Luxembourg court challenge, insisted that the power, which is unique among Europe's regulatory agencies, was an illegal power grab in breach of the EU's treaties.