It does seem rather heavy handed to have given you such a detailed grilling that you nearly missed your plane.
However Money Laundering is a serious offence, and being often connected with illegal activity, I can understand the need for HM Customs (or did the nasty anti-Royal socialists rename it to something which sounds like a Catalogue for casualwear?) to be vigilant.
You are indeed permitted to enter EU countries with up to €10,000 in cash and this is well publicised near baggage claim in most UK airports. I would imagine with a reasonable stash remaining from a few days’ stay, the Customs chappie wanted to ensure you hadn’t entered with more than the restricted amount, outlined here:
Of course it is perfectly legal to enter with more, you just have to declare it, prove where it came from and what you intend using it for; personally I keep most of my personal transactions (both electronic and personal cash) between countries to relatively small amounts, and well under €10k, to avoid any scrutiny.
I think there is far greater risk carrying large amount of cash around than the potential for loss from a single lost credit card, and that includes the risk of being flagged up as a potential money launderer and risking investigation for that, even if you are innocent.
I always carry a few credit cards, some in my wallet, some in my travel wallet with my (modest) amount of currency and some elsewhere, secreted in my packing; even if I lose one wallet, I always have cards to fall back on; Amex will deliver a new card almost anywhere next day, and also advance cash, or I can rely on friends or associates in most places I visit.
However, having said that I confess I do find myself carrying more cash than I used to in order to avoid the increasingly egregious foreign currency fees levied by my credit cards, so I can understand LuganoPirate’s policy of using cash.