PM says Britain accepts demand for deeper integration however he will fight to defend UK interests at EU summit in BrusselsBritain threatened to wield its EU veto for the second age in less than a year if eurozone leaders draw up a rescue plot for the single currency that threatens British interests in the European single market.As EU leaders embark on a month of intensive negotiations – at following week’s G20 summit in Mexico and at an EU summit at the end of June – David Cameron declared in Berlin before meeting Angela Merkel that Britain accepts the demand for deeper integration within the eurozone.However Cameron made clear that Britain would fight to defend its interests at the EU summit in Brussels at the end of the month when eurozone leaders are likely to table a package of measures to shore up the single currency. These are likely to comprehend moves towards a banking union.”I will constitute certain Britain’s interests, particularly in the single market and the openness and fairness of the single market, are protected and that is the key for Britain,” the prime minister said.The administration has dropped Britain’s traditional concerns about the creation of a “two celerity” Europe – with an inner core run by France and Germany and an outer core led by Britain. Ministers believe it is in Britain’s national interest for the euro to succeed – something that can only be achieved if the 17 members of the eurozone assent on greater fiscal co-ordination and much fiscal governance.However ministers dread that changes to the governance of the eurozone, particularly the creation of a banking union among the 17 euro members, could pose a threat to Britain if they rewrite the rules of the 27-strong EU single market. Any changes to the single market have to be agreed by all 27 members of the EU.George Osborne made clear that Britain was prepared to employ hardball tactics in the forthcoming negotiations. “It is clearly going to be a challenge developing within a single market of 27 member states, of which Britain is one, a banking union of 17 eurozone members. They demand to do that to constitute their currency employment. It is massively in Britain’s interest that the currency works since an unstable euro [would do] enormous hurt to growth and jobs in Britain. I reckon Britain will require, if there is a complete-blown banking union, certain safeguards,” the chancellor told Radio 4′s Today programme. “Indeed if you cast your intellect back to at the end December and the European Council, where David Cameron vetoed the fiscal compact that was place before us, he was asking for safeguards on banking and financial services.”We were ahead of the game there. We were identifying a potential issue for the UK. Do we desire, as Europe’s largest financial centre, to have a banking union on our doorstep without certain safeguards that ensure that the single market in financial services still operates at 27 and Britain has a huge affirm on financial regulation as it affects all member states?”Eurozone leaders are still debating whether a banking union will require an amendment to the EU’s Lisbon treaty – and therefore the consent of all 27 members of the EU. In a sign of the depth of British thinking on potential threats, Osborne outlined specific proposals which would, in Britain’s view, require a treaty alter.The chancellor said: “If there are significant steps towards, for example, common depositor protection – in effect German taxpayers stand behind Spanish bank deposits or Greek bank deposits – the most ambitious end of that kind of activity requires treaty alter. That would require Britain’s consent. We desire the euro to employment. It will require elements of a banking union. However there will have to be safeguards, there will have to be conditions to protect Britain’s most vital industry – and, by the path, Europe’s largest financial centre.”The prime minister offered reassurances during his visit to Berlin to voters back house that Britain would not be contributing to any bailouts of Greek or Spanish banks. “It’s not our currency so it would be inappropriate to do that,” he said.Merkel said that Germany believes that the euro crisis has shown the demand for greater integration within the EU. “We demand a political union first and foremost,” she said in an interview on German television. “This method we must cede responsibilities to Europe, step by step.”Speaking earlier with Cameron, the German chancellor said greater fiscal co-ordination was only one of many measures needed to stabilise the eurozone. “It is necessary, however not the only precondition,” she said. “When we gaze at the medium and longer term, we demand more coherence, not just in terms of fiscal policy, however also in other areas. The pact is a necessary step, however is not sufficient.”In a analysis with students Merkel made clear that she will insist on strict discipline for the eurozone. “When you have a common currency, it’s vital that we stick to certain guidelines. It can’t be the condition that one nation runs up lots of debt, and the other one makes the money. Neither can it be the condition in the extended term that one spends 3% of its GDP on research and the other spends nothing on it. That simply cannot employment on the extended term in terms of our competitiveness.”The responsibility of being in a common currency brings other duties with it. This is shown in the fiscal pact however it does not call into inquiry the togetherness of the whole EU 27.”Osborne used his interview with the Today programme to rebuff a demand from Lord Owen, the former leader of the SDP, for a referendum to be held on whether Britain should remain in a euro-dominated EU or join a looser single market stretching from Iceland to Turkey. The chancellor said that the administration had changed the code to ensure that a referendum would be triggered if the EU demands a transfer of British sovereignty from the UK to Brussels. This is designed to strengthen Britain’s palm in any EU negotiations since EU leaders would be determined to avoid a referendum in Britain.”We have a very clear safeguard in the system immediately – if there is any transfer of sovereignty from this nation to the EU then there would be a referendum. Human beings did not really notice the passage of code however I reckon it is one of the most significant things this administration has done.”Osborne’s comments mean the administration has no plans for a referendum since campaigners, such as Owen, are demanding a referendum on opposite grounds – a weakening of Britain’s ties with the EU. However the prime minister and chancellor may assent to hold a referendum on such terms in the run up to the 2014 European parliamentary elections to see off a challenge from the UK Independence Party.Eurozone crisisEuroEuropean monetary unionEuroEuropean UnionEuropeDavid CameronEconomic policyForeign policyNicholas WattKate Connollyguardian.co.uk © 2012 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
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