Michel Barnier to take over internal market portfolio

Talk of a separate portfolio for financial affairs had been doing the rounds of Brussels corridors in recent days, but in the end Mr Barroso decided it was a natural component of the internal market brief.

"Financial services in Europe have a lot to do with the deepening of the internal market," Mr Barroso told reporters, while announcing the full team that will take over early next year.

He said he was asking Mr Barnier "to deepen the internal market in all of its aspects," adding that would lead to further growth in Europe.

French president Nicolas Sarkozy is rumoured to have recently made several late-night calls to the Portuguese politician in order to secure the full responsibilities for his man in Brussels.

Mr Sarkozy was one of the chief voices calling for an overhaul of the Europe's financial supervision following the fall of US investment bank Lehman Brothers last year.

As internal market chief, the centre-right Mr Barnier - a former French foreign minister, who also served as a commissioner under Romano Prodi – will now hold the agenda-setting key for future EU legislation in the area.

UK concerns

The news on Friday means British Prime Minister Gordon Brown may face further accusation at home of having selected the ‘wrong job'.

A political carve-up in Brussels last week saw the UK's Catherine Ashton take the new EU high representative job, while France successfully secured the sought-after economic post.

"Our French partners have a different view on market issues that touch on Britain's vital economic interests," said William Hague, shadow foreign affairs spokesman.

London's financial heartland contributes a disproportionate amount to the British economy, but despite the concerns, it is unclear what the Frenchman's appetite for financial regulation will actually be.

And in a move that should allay some of Britain's fears, Jonathan Faull, a senior UK civil servant in the commission, looks set to become director-general under Mr Barnier.

Member state governments and the European Parliament are currently considering a raft of financial proposals put forward by the commission, including plans for a new supervisory framework, greater regulation of hedge-funds and curbs on bankers' pay.