The European commission has underlined the negative impact of David Cameron’s summit gambit by pledging that the City’s financial institutions would be subject to new regulations hatched in Brussels.
Emphasising the EU’s determination to dismiss Cameron’s abortive attempt to secure exemptions for the City, Olli Rehn, the commission vice-president in charge of economic and monetary affairs, was scathing about the prime minister’s campaign. This was rejected by the Brussels summit on Friday, triggering a British veto of German plans to anchor a new eurozone fiscal union in a renegotiated Lisbon treaty.
Cameron’s move isolated Britain in Europe as seldom before, producing weekend headlines and comment across Europe that the UK was on the way out of the EU.
“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,” said Rehn. “If [Cameron’s] 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.”
Launching a new set of economic convergence policies – known as the “six-pack” – which come into force on Tuesday, Rehn admitted that Britain’s blocking of attempts to reopen the Lisbon treaty could create problems for the EU. Potentially, the move makes it legally more difficult to establish the eurozone’s “fiscal compact” – the main result of last Friday’s summit – by March.
Because of the British block, at least 23 and possibly 26 of the 27 EU states are now to agree a new international treaty among themselves as the answer to the eurozone debt crisis. The aim is for all eurozone countries to enact laws setting binding debt ceilings and with quasi-automatic penalties and fines for those countries breaking the rules.
Germany, the architect of the new regime, wants to strengthen the key European institutions – the European commission and the European court of justice – giving them formidable powers of intervention in enforcing the new regime.