British diplomacy will soon be tested to the limit as the government defends London’s interests in the face of a welter of new regulations that will shape the financial services industry for a generation. After the worst financial crisis in living memory, there is no doubt that more effective supervision of financial markets is needed.

In adopting the Vickers Report’s recommendations, the UK is already at the forefront of profound changes. It must now ensure that European policymakers recognise the City of London’s value to the European economy and limit the damage that badly-constructed, overzealous and seemingly retributive regulation might do to it.

Yet in defending Britain’s national interest, David Cameron must resist populist pressure to drape the City in a Union flag. Instead, the prime minister should encourage European colleagues to recognise that the City – a global centre with a critical mass of people and technology – is a precious European asset. It needs to be cherished and promoted, much like the German car industry or the French aerospace sector.