The Italian Prime Minister, Mario Monti, insisted yesterday that David Cameron's demands for special protection for the City of London at last month's European Union summit were unacceptable.
Speaking on a visit to London, Mr Monti said even those who, like him, were ready to consider Britain's requests – which included a guarantee that future decisions on financial regulation would have to be taken unanimously – were "very clear in saying that is not an acceptable condition".
Mr Monti also hinted that it was misguided of Mr Cameron, with whom he held talks at Downing Street earlier in the day, to link the fiscal compact to the issue of financial regulation by Brussels. "I don't think they are related topics" he said.
Mr Monti was hoping to persuade private sector investors based in London that he is turning around Italy's economy through far-reaching labour market and welfare reforms. Italy's borrowing rates have risen sharply in recent months, as panicking investors have sold Italian government bonds, igniting fears that the country, which is one of the most indebted in the world, might need a bailout.
Mr Monti said Italy was committed to wiping out its budget deficit by next year, despite the country's likelihood of falling into recession.