UK halts talk of a banking union with EU

Saturday 30 June 2012

DAVID Cameron claimed he had safeguarded Britain's position in Europe as EU leaders extended a lifeline to Spain's teetering banks.

LOST IN THOUGHT: David Cameron described his stance at Brussels as Britain standing tall. Pic: EPA

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Geoff Meade and Gavin Cordon

At the end of two days of fraught negotiations in Brussels, the Prime Minister said he had ensured that the UK would not be drawn into a planned "banking union" while securing explicit safeguards for the single market.

He also hailed a deal struck by the 17 eurozone members in the early hours of the morning to allow cash from EU bailout funds to be channelled directly to struggling banks without adding to government debt."For the first time in some time we have actually seen steps taken that I think the markets will see are trying to get ahead of the game," he said."They need to be followed through, and I hope there won't be a lot of quibbling. If they want to save their currency they have got to get on and do it."Mr Cameron, who is under pressure from Conservative back- benchers to stage a referendum on the UK's membership of the EU, also mounted an impassioned defence of the relationship.Describing himself as a practical Eurosceptic, he said the important concessions that he had won on banking union, the single market, and the new European patent court showed Britain could stand proud and tall in Europe. "I am actually confident that Britain – fighting, standing up for itself in Europe – can secure good deals in Europe," he said."We need to safeguard what we do want in Europe and I am confident that we can do that. I think we should go in to this argument confident that we can shape a relationship with Europe that benefits the United Kingdom."Mr Cameron said he fought in the negotiations to remove any suggestion that banking union could be extended to all 27 EU member states, ensuring British banks would continue to be regulated by the Bank of England. "We have to stand behind our own banks, but I don't want British taxpayers guaranteeing eurozone banks, Spanish banks or Greek banks," he said.He won an agreement that the part of the new European patent court covering pharmaceuticals would be based in London, bringing millions of pounds and hundreds of jobs.Officials also revealed that Mr Cameron and European Commission president Jose Manuel Barroso had worked together on a summit declaration emphasising that the 27-nation single market would not be compromised by new 17-nation rules for the single currency."It was tough securing this, but absolutely vital, so that as this work proceeds it goes ahead in a way that protects our interests," the Prime Minister said.Earlier, financial markets were boosted by the surprise news that the eurozone leaders had struck an overnight deal to shore up banks in Spain and other weaker nations.The agreement came after Italian Prime Minister Mario Monti and Spain's Mariano Rajoy faced down Germany's Chancellor Angela Merkel in a tense summit showdown.Mrs Merkel had come to the summit determined to maintain her hardline position insisting that there were no short-term fixes on the table. However, she was forced to relent after Mr Monti and Mr Rajoy – with the backing of French President Francois Hollande – made clear they would block any further progress at the summit if they did not get help to cut their soaring borrowing rates.The agreement finally came after Mr Cameron and the other non-eurozone leaders left the summit at around 1am, leaving the single currency bloc to thrash out their differences.The resulting deal triggered a fall in the yields on 10-year bonds in Italy and Spain to 4.5% and 5.8% respectively – a welcome drop from the unsustainable 7% level that pushed Greece, Portugal and Ireland into bail-outs. EU officials said they hoped the positive response of markets would last.John Longworth, director-general of the British Chambers of Commerce, said: "British businesses, and exporters in particular, say the eurozone crisis is one of the greatest sources of uncertainty they currently face. The sense of frustration, concern and exasperation continues to mount across the real economy. Companies across Britain and Europe are tired of false dawns. Though there is still more work to be done over the coming weeks, the deal done in Brussels needs to stick."

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UK halts talk of a banking union with EU

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