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George Osborne is not the first choice for many in the City to be chancellor, with surveys suggesting that Alistair Darling or Ken Clarke would be preferred candidates.

Mr Osborne says he has tried to build relationships with people in the City and has met the most important figures.

He also suggests that some of the criticism of him stems from the fact that he would not be a soft touch as chancellor.

“I’m not just there to be a cheerleader for financial services, right or wrong,” he says. “I want a competitive financial services sector but I want to protect the taxpayer from badly regulated financial services.”

Mr Osborne regards his plan to restore banking regulation to the Bank of England, which has caused concern in the Square Mile, as essential in rebuilding London’s reputation.

He wants financial services to be competitive but thinks the sector has become too dominant in the British economy.

Mr Osborne was visiting “real engineering” companies in Yorkshire on Tuesday – makers of pallets and steel products.

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