The City of London’s bankers and financial corporations will not escape tougher regulation despite David Cameron’s veto over changes to the EU Treaty, the European Commission has warned.
Britain was the only one of the 27 EU member states not to agree to the new “fiscal compact” at Friday’s summit. EU economics commissioner Olli Rehn welcomed the agreement and said it was a shame the UK had not signed up to it “as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives”.
Rehn added: “We want a strong and constructive Britain in Europe, and we want Britain to be at the centre of Europe, and not on the sidelines.”
He said the UK had agreed and remained subject to a so-called “six-pack” of stricter economic monitoring and surveillance on all European economies, which comes into force on Tuesday. The “fiscal compact” agreement includes tougher measures and sanctions, although the sanctions do not apply to the UK. However, Rehn said existing rules via the single market applied to Britain, despite Cameron blocking formal changes to the Treaty at the summit.
Rehn said: “If this move was intended to prevent bankers and financial corporations in the City (of London) from being regulated, that is not going to happen. We must all draw lessons from the financial crisis and that goes for the financial sector as well.”
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He added: “I would also like to remind you that the UK Government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance which enters into force tomorrow. The UK’s excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states.”
The prime minister had claimed that without Britain’s support, the “fiscal compact” would lack the necessary authority of EU institutional backing, such as the Commission to put the new measures in place and the European Court of Justice to enforce them.
Rehn said: “I am happy that the role of the institutions was recognised and reinforced. The speculation of some media that the treaty is not enforceable is unfounded. The result we got at the summit was better than some suggested – bold, effective and legally viable.”
However, automatic penalties on members of the European single currency could be more difficult to implement because the summit deal was not enshrined in a unanimous treaty change.