The prime minister threatens to veto Eurozone reforms unless the City is protected
David Cameron will demand safeguards for the City of London in return for supporting reforms of the EU treaty in Brussels.
The prime minister will insist measures to protect Britain’s financial services must be put in place or he will veto changes designed to secure the future of the single currency. There are fears the City could be hit hard by the proposed financial transactions tax, or a ‘Tobin tax’, and other protections for the eurozone.
German chancellor Angela Merkel and French president Nicolas Sarkozy called for the treaty to be reformed after holding emergency talks in Paris on Monday. New rules and sanctions governing the eurozone could be introduced in the reforms to reassure markets about the single currency’s long-term stability.
Cameron said he would “defend and promote British interests” at the European Council summit. When asked if he would be prepared to reject a treaty that would save the Euro, he said: “To save the single currency you need more than a treaty, you need to address the competitiveness problem, the deficit problem, you need to take action to convince the markets that you are serious.
“You need all the institutions of the eurozone, including the European Central Bank, to get behind that. What I’m saying is that if – and eurozone countries do need to come together, do need to do more things together – if they choose to use the European Treaty to do that, Britain will be insisting on some safeguards too. As long as we get those, then that treaty can go ahead. If we can’t get those, it won’t.”
Sarkozy and Merkel agreed a plan on Monday to stabilise the eurozone which they would prefer to be backed by all 27 EU member states. However, they would be willing to press on with the agreement of the 17 eurozone members if that could not be achieved.
Cameron told The Times Britain’s demands would be “practical and focused” but said EU leaders should not mistake that pledge for a “lack of steel”. He said a treaty change involving all 27 EU members was the most “credible” way of pushing Europe forward.
Ken Clarke has urged eurosceptic Conservative backbenchers not to expect the repatriation of powers from Brussels at the EU summit. The justice secretary told the Financial Times Cameron should focus on maintaining the “financial stability of the western world”.
Clarke said Britain should be ready to accept “proper” financial regulations from Brussels, but rejected the idea of a Tobin tax, saying: “It’s the devil’s own job to collect.”
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