Cameron threatens to block euro rescue deal

Prime Minister may veto Franco-German treaty unless it safeguards the City and single market

David Cameron last night threatened to veto a new European Union treaty to help solve the eurozone debt crisis unless it safeguards the City of London.

The Prime Minister raised the stakes over the Franco-German plan to rescue the single currency after it emerged that the proposed treaty is likely to cover all 27 EU members, including the UK.

But Kenneth Clarke, the Justice Secretary and a prominent Europhile, told today's Financial Times that now was not the right time to demand concessions. He urged Mr Cameron to negotiate constructively and focus on "how to maintain the financial stability of the Western world".

A treaty needing approval only by the 17 eurozone nations would reduce the pressure on Mr Cameron from Eurosceptic Tory MPs to win a "repatriation of powers" in return for signing it.

France favours a "eurozone-only" deal but EU sources suggested yesterday that a majority of countries back Germany's plan for an EU-wide treaty.

So does the European Commission, amid legal doubts over whether 17 nations could use bodies such as the European Court of Justice to impose budgetary curbs on governments.

A proposed rescue package was set out in a letter to EU governments by Herman Van Rompuy, president of the European Council – the 27 heads of government who will discuss a treaty change in Brussels tomorrow night.

A leaked draft calls for "more intrusive control of national budgetary policies by the EU", with the Commission empowered to impose austerity measures on countries needing a bailout. But some of the most controversial ideas – such as depriving bailed-out countries of EU voting rights – have run into opposition and may be dropped.

Mr Cameron warned fellow EU leaders that he would ensure at the Brussels summit that the EU single market and Britain's financial services industry would be protected. He told the BBC: "I will not sign a treaty that does not have those safeguards in it, around things like the importance of the single market and financial services.

"If they choose to go ahead with a separate treaty, then clearly that's not a treaty Britain would be signing or amending, but if they want to use the European institutions then we will be insisting on the safeguards and the protections that Britain needs."

But he conceded the most important British interest now was to resolve the eurozone crisis. His veto threat will anger some in the eurozone, who have accused Britain of lecturing them from the sidelines while refusing to contribute bailout funds. It could force the summit to opt for a 17-nation deal rather than an EU-wide one. In practice, countries who want all 27 to sign might offer Mr Cameron a form of words reaffirming their commitment to the single market.

In the latest steps towards a euro rescue package, the European Central Bank is tomorrow expected to cut interest rates by 0.25 points to a record low of 1 per cent. There is anger in Brussels at ratings agencies after Standard & Poor's said 15 euro nations, including Germany and France, could lose AAA status. Yesterday S&P issued a similar warning over the bailout fund, the European Financial Stability Facility.

Sarkozy's joke at UK's tax expense

President Nicolas Sarkozy jested yesterday that France was more "business friendly" than Britain as a result of tax increases by David Cameron's government.

He suggested the estimated 300,000 young French people living in greater London would soon get "fed up" with paying British taxes and come back to France.

"Here, we are 'friendly business'," Mr Sarkozy said in approximate English. "That's a jest. Don't tell David Cameron, whom I like very much. It's a pleasantry, 'a joke'," he repeated in English. Mr Sarkozy was talking to young people at the opening in Paris of Google's new €100m headquarters for southern and eastern Europe. He added: "At the rate they are increasing taxes in London, we are going to get all our young people back. London is now the seventh biggest French city. When you're fed up with paying taxes over there, come here."

Relations between the two leaders are said by British and French officials to be excellent. They went together to Tripoli in September and were applauded by Libyan crowds for the Franco-British role in the Nato operations which helped topple Gaddafi. But at an EU summit in Brussels soon after Mr Sarkozy said Mr Cameron had "lost an opportunity to shut up" when he demanded the right to take part in negotiations on the eurozone debt crisis.

John Lichfield

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Online Sales and Customer Services Executive

£15000 - £18000 per annum: Recruitment Genius: An On-line Sales & Customer Ser...

Recruitment Genius: Accounts Assistant - Fixed Term Contract - 6 Months

£15000 per annum: Recruitment Genius: One of the largest hospitality companies...

Recruitment Genius: Electricians - Fixed Wire Testing

£28000 - £32000 per annum: Recruitment Genius: As a result of significant cont...

Recruitment Genius: Customer Service Advisor

£16575 - £19000 per annum: Recruitment Genius: An excellent opportunity is ava...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue