German Chancellor Angela Merkel and British Prime Minister David Cameron were scheduled to try and resolve clashing views on the eurozone crisis yesterday, after Berlin accused London of being selfish about Europe in comments that touched off British sensitivities about German bossiness.
The outlines of a potential deal became clearer ahead of the Berlin meeting as the Financial Times reported that Cameron would be prepared to back Merkel’s plans to strengthen economic union in the eurozone, on condition he wins safeguards to protect the City of London from European legislation.
Cameron will restate his opposition to a Franco-German proposal for a so-called Tobin tax on financial transactions, which Britain believes would have a withering effect on its financial district, the FT said in an unsourced report.
A British government spokesperson said he was unable to comment on the report.
Merkel is seeking limited changes to the EU treaty to provide stricter fiscal discipline within the 17-nation eurozone, in the hope of preventing another debt crisis like the one currently spreading across the continent.
Cameron is to push for any such change to be limited to the -eurozone nations, instead of the entire 27-nation bloc, which would have to ratify it, the paper said.
Citing what it said was a six-page paper from the German Foreign Office, the Daily Telegraph said Germany wanted to create a European Monetary Fund, which the paper said would be empowered to take financially ailing countries into receivership and run their economies.
The Telegraph quoted the document as saying the proposed treaty changes are a first stage “in which the EU will develop into a political union” — something that many on the right-wing of British politics would find anathema.
The paper said Merkel would urge Cameron to rule out a popular vote on the EU in Britain in the form of a referendum, a policy strongly backed by the right wing of his Conservative party.
“Limiting the effect of the treaty changes to the eurozone states would make ratification easier, which would nevertheless be required by all EU member states [thereby less referenda could be necessary, which could also affect the UK],” the paper quoted the German document as saying.
The British government wanted a low profile for Cameron”s visit, but such hopes were dashed by two lawmakers high up in Merkel’s Christian Democratic Union (CDU) who blasted eurozone-outsider Britain’s stance in the days before the visit.
Merkel told the CDU annual congress in Leipzig this week that Europe faced its “toughest hour since World War Two.”
She prescribes altering the EU treaty to impose German-style budget discipline, preferably on all 27 members of the EU rather than just the 17 countries in the eurozone.
“Plans for a possible treaty change are now at a very interesting point and we expect to exchange views with our British partners,” CDU whip in the Bundestag Peter Altmaier said.
However, treaty change talk seems to irritate Cameron’s conservative-led coalition for two reasons: It falls far short of the “big bazooka” response he urges; and it touches a raw nerve about ceding more sovereignty to the European Commission in Brussels.
Britain is already worried that Germany’s proposals for a tax on financial transactions — which it still wants introduced in Europe despite rejection by the G20 — would hurt London’s competitiveness as a financial hub.