Cameron rules out treaty change

German, UK leaders stress the need for a stable eurozone, but Cameron rules out transfer of powers to Brussels.

BERLIN | David Cameron, the UK’s prime minister, today promised to work closely with Germany and other EU members in efforts to stabilise the eurozone.

Cameron said, however, that “we don’t want to see transfer of powers from Westminster to Brussels”, reiterating a pledge made in the run-up to parliamentary elections held on 6 May and stated in the agreement struck between the members of the UK’s governing coalition.

Cameron was speaking in Berlin after a meeting with Angela Merkel, Germany’s chancellor, who has said that changes may be needed to the EU treaty to in order to improve economic governance of the eurozone and to sanction countries that fail to respect rules on public finances.

The UK is not a member of the eurozone, but its approval would be needed for changes to the EU treaty.

“Britain obviously is not in the euro and Britain is not going to be in the euro, and so Britain would not agree to any agreement or treaty that drew us further into supporting the euro area,” he said.

Speaking after Cameron’s first official visit to Berlin since becoming prime minister, Merkel stressed the need for a new “culture of stability” within the eurozone, but said that there was no agreement yet on the need for a change to the EU treaty.

She said that EU finance ministers were just starting to discuss measures to strengthen governance in the eurozone. While Germany had some ideas that would require treaty changes, these would be discussed at a later date.

The two leaders also struck different notes on Germany’s controversial decision to ban naked short selling. Merkel defended the move, which was announced on Tuesday (18 May), saying that there was a need for rapid action to tackle excessive market behaviour and that planned EU rules on short selling were taking too long to be agreed upon.

Asked whether he would follow Germany’s move, Cameron said the decision would be up to the Financial Services Authority, the UK’s financial markets regulator. But he said it was more important to tackle the underlying causes of the financial crisis than the symptoms. He said the causes were excessive debt and deficit levels.

Despite these differences, the two leaders laid the stress on their countries’ shared interests.

The German chancellor said that trade means that even for countries that, like the UK, are not members of the euro, it is important that the euro is stable.

“In a time of economic crisis, we will work very closely together as big industrialised countries,” Merkel said.

Cameron echoed the importance of stability, noting that 50% of the UK’s trade is with the eurozone.

He said there had been “lots of agreement on action on deficits” and underscored the importance for the UK of a “strong and stable eurozone”.

Cameron said that they had also agreed on the need for financial market regulation to make sure that “banks are serving the economy” rather than the other way round.

“This is the start of a very strong and positive partnership,” he said.

While the two leaders were meeting in Berlin, Wolfgang Schäuble, Germany’s finance minister, was playing a central role at the first meeting of a newly established ‘task-force’ formed by Herman Van Rompuy, the president of the European Council.

At the task-force’s meeting, which was held in Brussels, Schäuble presented fellow finance ministers – as well as representatives from the European Commission and the European Central Bank – with a nine-point plan for improved eurozone governance.

Among the proposals is one that would strip member states of voting rights for at least a year if they persistently broke eurozone rules on deficits and public debt. This would require a change to the existing treaty.

 

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