George Osborne threatens referendum over place in the EU

Warning comes after Germany rejects demands for immediate action to save euro

George Osborne delighted Tory MPs yesterday – and fired a shot across the bow of European leaders – as he signalled that ministers were prepared to call a referendum over Britain's place in the European Union.

The Chancellor also warned that the Government was ready to wield its veto in Brussels if there was an attempt to impose fresh controls on British banks as a result of moves to tackle the deepening eurozone crisis.

He spoke out after David Cameron returned from talks in Berlin with the German Chancellor, Angela Merkel, at which she rejected Britain's demands that Germany come up with an immediate plan of action to prevent the implosion of the euro.

He is pressing for Germany to take decisive action within weeks to rescue such beleaguered economies as Greece and Spain and shore up the currency. But she told him that it would "take years" to fix the single currency's problems.

Britain strengthened its rhetoric over Europe yesterday after months of demands from Tory MPs to use the chaos to stage a referendum on British membership of the EU. The Coalition's policy is to stage a nationwide vote only if there is any attempt to transfer power from Britain to Brussels.

But in remarks that were aimed as much at EU leaders as the Tory right-wingers, Mr Osborne suggested that could happen if negotiations over the eurozone resulted in a "reshaped relationship with Europe". He said: "A reshaped relationship with Europe would imply, would involve, a transfer of sovereignty or powers to Brussels. I think we have a very clear safeguard in the system now, thanks to this Government.

"If there is any transfer of power from this country, transfer of competence or transfer of sovereignty from this country to the European Union, then there will be a referendum."

Although Mr Osborne said there was a "remorseless logic" to creating "something more akin to a banking union or a financial union" among eurozone members, he made clear Britain would not be part of it.

In a warning that the country would use its veto to prevent fresh curbs on the City of London, he said: "Let me be absolutely clear: there is no way that Britain is going to be part of that banking union. We are not part of the eurozone. We chose not to join the euro, precisely because of the loss of national sovereignty that would be involved, the loss of flexibility to manage our banks in the way we wanted to, to manage our public finances in the way we wanted to."

Mr Cameron went to the Berlin talks with Barack Obama's backing to urge Ms Merkel to come up with an "immediate plan" to put the brake on the crisis sparked by spiralling Greek debt and Spain's continuing inability to recapitalise its banks to the tune of €80bn (£65bn).

The need for action was brought into sharper focus last night as Fitch, the ratings agency, downgraded Spain's sovereign debt rating three notches, from A to BBB. The agency said the likelihood of external financial support is rising.

Fitch also said Spain's financing difficulties will make it hard for it to intervene decisively in a banking-sector restructuring and raise the likelihood of outside external help.

Mr Cameron urged Ms Merkel to accept the introduction of eurobonds to provide an immediate remedy, but Ms Merkel gave no sign that Germany was prepared to alter its opposition to eurobonds. She told Mr Cameron: "It is human to think that the euro crisis could be solved in one fell swoop, but I don't think this would work. The euro crisis developed over 10 years and it is going to take several years before we can repair the system and make it viable again."

Mr Cameron told reporters after the meeting: "I am pressing the case for action to solve the financial crisis, recapitalise the banks and build the big firewall to get growth going. All these things need to happen."

In a television interview given earlier, Ms Merkel stressed the need for far greater convergence in Europe at all levels.

"We need not just a currency union, we also need a so-called fiscal union with more common budget policies," she said. "We need above all a political union. That means we must give up powers to Europe."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant - Birmingham

£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Trainee Recruitment C...

Recruitment Genius: Interactive / Mobile Developer

£40000 - £45000 per annum: Recruitment Genius: This digital production agency ...

Recruitment Genius: PHP Developer - Midweight

£40000 - £45000 per annum: Recruitment Genius: This digital production agency ...

Recruitment Genius: Junior Front End Developer

£20000 - £30000 per annum: Recruitment Genius: This digital production agency ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks