Take power back from EU, says Sir John Major

The eurozone crisis could give the UK an opportunity to grab back powers from Europe, Sir John Major said today.

Any new treaty drawn up in its wake would allow Britain to renegotiate its relationship with Brussels, particularly on employment issues, he suggested.

The former prime minister claimed it was likely that Europe was heading towards a "federal state within the eurozone" as leaders try to find a resolution for the current crisis.

He told the BBC's Andrew Marr show: "There won't necessarily have to be a treaty in this country for fiscal union.

"It is conceivable there would be a treaty just among members of the eurozone."

He added: "But at some stage there will be another treaty because if there is fiscal union in Europe it changes our relationship to Europe.

"I think it gives an opportunity for two things. Firstly it gives us an opportunity to negotiate for the looser form of Europe that I would have liked to have seen in the 1990s.

"I think there are some areas that are worth looking.

"Fishing is one. I think there are some elements of employment law.... things like the working time directive, which I think is a very foolish piece of legislation - we could look at repatriating part of it."

A group was formed last month by new-intake Tories to put pressure on the leadership to weaken ties with Brussels.

Sir John also said it was time to get the Greek default "out of the way" but argued it should be done within the eurozone and with assistance to prop up banks that hold the country's bonds.

He said it was "extremely unlikely" that the eurozone would "fracture with nations dropping off the edge".

"In the short term the banks need to be recapitalised and Greece needs to default. The sooner that happens and Greece defaults the sooner you remove something from the overhang in the markets.

"If Greece defaulted and couldn't pay its debts, all the Greek bonds that are held in other banking systems across Europe would suddenly have no value.

"You could, as a knock on effect, create a banking crisis in Western Europe. That would be absolutely catastrophic.

"So Greece must not default until the banks are in a position to absorb any losses there may be without creating any banking crisis."

He suggested the most likely option was turning the European structural facility into a bank and allowing it to buy up bonds or recapitalise the banks.

"Then, it would be thoroughly desirable, in my view, to get the Greek default out of the way. It is a terrible overhang in the market, let's get it done."

PA