Splendid isolation: ”We’re not in the euro and I’m glad we’re not in the euro,” British Prime Minister David Cameron said after European Union talks ended without an agreement. Photo: AP
Prime Minister David Cameron vetoed treaty change that did not offer Britain special protections, including an exemption from any planned tax on financial transactions.
The UK’s financial services industry contributes 10 per cent of the nation’s GDP and brings more than £53 billion ($A81 billion) into tax coffers.
After 11 hours of heated talks through Thursday night, Mr Cameron told reporters: ”Without those safeguards it is better not to have a treaty within [the Lisbon] treaty but have [other] countries make their arrangements separately. It was a tough decision but a right one.”
French President Nicolas Sarkozy said the request for a British exemption from a financial transactions tax was the sticking point: ”We could not accept this, as at least part of the problems [faced by Europe] came from this sector.”
The Financial Times reported that several diplomats said Mr Cameron emerged from negotiations deeply wounded, getting no trade-off for British interests and angering fellow leaders.
”This is going to cost the UK dearly,” said one. ”They have antagonised everyone.”
The Czech Republic, Sweden and Hungary are still deciding whether to participate in the new agreement. Hungary has recently applied for ”precautionary financial help” from the EU and the International Monetary Fund.
Asked by the BBC whether the UK would suffer because it was no longer at Europe’s top table, British Foreign Secretary William Hague said Britain still participated in many policies regarding economic growth and foreign issues, ”so it doesn’t leave us outside any club … It doesn’t mean the UK loses its influence over other matters.”
But Britain was not about to agree to any loss of national sovereignty, which would be required by the changes, he said: ”There are very few people in Britain that would want us to take part in that.”
European Council president Herman Van Rompuy announced that the euro area would aim to make another €200 billion ($A261 billion) available to the IMF to help with bailouts, the amount the IMF had predicted would be needed to recapitalise Europe’s banks.
The new fiscal accord would require each country to establish an ”automatic correction mechanism” when budgets stray from strict targets.
The blueprint also foresaw ”more intrusive control” of taxing and spending by governments that overstep the deficit limit of 3 per cent of gross domestic product.
The text of the new intergovernmental treaty should be completed by March, with complex ratifications by national parliaments to follow.