UK banks 'not immune to regulation'


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The Independent Online

David Cameron's veto over EU Treaty changes will not save the City of London's bankers and financial corporations from tougher regulation, the European Commission warned today.

EU Economics Commissioner Olli Rehn, welcoming the new "fiscal compact" agreed by the other 26 member states at last Friday's summit, said: "I regret very much that the United Kingdom was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives."

He went on: "We want a strong and constructive Britain in Europe, and we want Britain to be at the centre of Europe, and not on the sidelines."

Mr Rehn was announcing the entry into force tomorrow of a so-called "six-pack" of tougher economic monitoring and surveillance on all European economies, to which the UK had agreed and remained subject to, insisted Mr Rehn.

The "fiscal compact" agreed at Friday's summit by the other 26 added tougher measures and sanctions, and sanctions did not apply in the UK.

But Mr Rehn made clear that regardless of Mr Cameron blocking formal Treaty change at the summit, existing rules via the single market did apply.

The Commissioner said: "If this move was intended to prevent bankers and financial corporations in the City (of London) from being regulated, that is not going to happen. We must all draw lessons from the financial crisis and that goes for the financial sector as well."

He continued: "I would also like to remind you that the UK Government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance which enters into force tomorrow.

"The UK's excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states."

Mr Rehn said the "intergovernmental" agreement at the summit to introduce a "fiscal compact" among 26 countries and bypass Mr Cameron's treaty change veto was "bold, effective and legally viable".

The outcome was "a major milestone in Europe's economic governance".

He went on: "Of course, we would rather have had a treaty of 27 and not only 26.

"I regret that we could not, but we now have this fiscal compact of 26, which marks another step in the economic discipline of the European Union."

Mr Cameron had claimed the deal without the UK lacked the necessary authority of EU institutional backing, including the Commission to implement the new measures and the European Court of Justice to enforce them.

But Mr Rehn insisted: "I am happy that the role of the institutions was recognised and reinforced. The speculation of some media that the treaty is not enforceable is unfounded. The result we got at the summit was better than some suggested - bold, effective and legally viable."

The only area which may be more difficult to implement because the summit deal was not enshrined in a unanimous treaty change, would be the imposition of automatic penalties on eurozone member states.

Meanwhile, it was "business as usual" for British Government ministers in their meetings in Brussels this week, according to a UK Government official.

First in town after the summit shock, was Transport Secretary Justine Greening, for talks with fellow transport ministers. Later this week, Home Secretary Theresa May is due for another routine gathering on EU justice and home affairs business, including asylum and immigration issues.

"It's just business as usual. Nothing which happened at the summit in any way affects the day-to-day contacts with our colleagues" said one official.