As European leaders gather for the latest in the seemingly endless round of summit meetings, the stakes could hardly be higher. After any number of fudges, stop-gaps and half-measures, time is running out to solve the euro's problems. Yet the list of topics upon which there must be progress in Brussels is fiendishly long, including everything from immediate measures to protect Spain and Italy, to EU-wide banking union, to Germany's vision of a more fiscally united future.
For Britain, the central issue is narrower, but no less tricky. Few question the need for a banking union to break the increasingly toxic link between Europe's ailing financial institutions and its indebted national governments. But, for all the Government's loud calls for Europe's leaders to press smartly ahead, when it comes to the City of London's world-beating financial services industry, encouragement is swiftly replaced with recalcitrance.
So far, the matter has been handled badly. At the now-notorious summit last December, the Prime Minister tried to use eurozone efforts at closer fiscal ties to secure safeguards for the City. Instead, most of Europe agreed to press ahead regardless, leaving Britain out in the cold.
Not only is David Cameron's outspoken commitment to protecting the City difficult to reconcile with Britain's long-standing support for the single market. More importantly, the financial services industry itself fails to share either Mr Cameron's analysis of what the "red lines" should be, or his view that, unless such demands are met, it is better not to be involved at all.
Europe's welcome – if belated – talk of banking union only ups the ante. In fairness to Mr Cameron, there are perils here. A caucus of the euro countries making policy decisions ostensibly for themselves, but with inescapable impact on the whole EU, is, indeed, undesirable. But, for all the Eurosceptic hysteria, it is not the inevitable outcome of closer union. And pugnacious isolationism is not the way to escape it.
On many of the specifics of a banking union, it may be possible to find solutions, albeit rather messy ones, that neither impair the single market nor constitute an unacceptable loss of sovereignty. We can, after all, share principles even if we do not share institutions, as is common practice already. So Britain could, for example, remain outside a common deposit protection scheme on the grounds that a mechanism is in place nationally.
But it is the financial transaction tax backed so wholeheartedly in, among others, France and Germany, that throws the contradictions of Britain's position into sharpest relief. It is here that those distrustful of Europe are at their most incendiary, invoking the spectre of Britain leaving the EU altogether. Such arguments do not take account of the immense benefits to the City from Britain's place in Europe. They also overlook the stark reality that, with European banks so strongly represented in London, there would be no way to shield the City from its effects.
More than anything, then, the central priority must be for Britain to retain its place at every possible negotiating table. Eurosceptics point to Norway as the template upon which the UK should model itself. In fact, it is Norway that exemplifies the dangers: outside the EU but, thanks to ineluctable ties of trade and geography, too often unable to avoid falling into line with policies upon which it has no influence.
What is needed in Brussels this week is less tub-thumping from a Prime Minister with his eye on his back benches, and more constructive involvement in finding a way through. The eurozone is fighting for its life. It is not in Britain's interests to make solving its problems more difficult still.
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