UKIP has launched a strong rebuttal after learning Arlene McCarthy, a Labour MEP is supporting proposals to increase EU control of the UK banking sector and introduce an EU criminal law offence over the Barclays/Libor scandal.

UKIP City spokesman Godfrey Bloom MEP said: “UKIP believe wholeheartedly that some bankers should have their collars felt. We think the same of those regulators and politicians, both here in the UK and at an EU level, who are responsible for this financial catastrophe, who were driven by their own greed and ideology. Millions are unemployed and in Greece and elsewhere the suicide rate rises inexorably.

“But by what authority does Ms McCarthy believe that the EU can set up a criminal court to try bankers? Under whose law, under whose jurisdiction and in what way does she think this might happen?”

Ms McCarthy was talking to Bloomberg about the European Commission’s proposals to grab power over the financial sector. According to the financial news agency, Stefaan De Rynck, a spokesman for Commissioner Barnier wrote in an email, “The lesson which we draw from this case is that it reinforces the need for ensuring the highest standards of conduct in the regulation of financial services,” and later, “The revelations show the need to reinforce penalties, including criminal sanctions”.

Arlene McCarthy, the lawmaker leading work in the EU Parliament on the draft law on market abuse, said she and Barnier discussed how the bloc’s rules should be extended to ensure that manipulation of interbank lending rates is treated as a criminal offence. She said the EU needs to “give regulators the tools they were asking for to be tougher” on market abuse.

Mr Bloom said: “At home in the UK, Osborne and Balls are squabbling about whether it is one or the other’s fault. Meanwhile Brussels eyes a far greater prize, our economic lifeblood, with undisguised glee.”