Friday 9 December 2011

The Veto

Cameron has played the UK's veto. Returning social policy powers to London wasn't on the table, but it seems that having a seat at the Eurozone meetings and opt-outs on financial services laws were. Ironically the former was to ensure that the Eurozone didn't start dividing up the internal market, while the latter would have, er, divided the internal market by providing one rule for the UK and another for the other 26...

In any case the UK has been left out of the negotiating room: the deal will be signed by 23 Member States, with others considering whether or not to sign up. Backing out of a deal was always going to upset the Eurozone countries, but it will be interesting to see how the UK's relations will develop with the other non-Eurozone countries. Sweden's foreign minister mocked the UK's position in a tweet:

"Worried that Britain is starting to drift away from Europe in a serious way. To where? In a strong alliance with Hungary."

The inclusion of these other non-Eurozone countries should be enough to ensure that the Eurozone doesn't go ahead on internal market matters without the rest of the EU (the Danish presidency will be particularly helpful in protecting the position of non-Eurozone members), though it probably does damage the short term influence of the UK in the EU.


  1. I believe the proposals leading to the UK veto were a 'stitch-up', that Sarkozy and Merkel knew well that the UK would veto proposals leading to the 'Tobin tax'. Merkel also has her country's interests at heart in that the centre of gravity of Financial services would shift from London, and Sarkozy would expect to have some spin-off from that. Bit like Blair and Bush - dodgey dossier but this time no one gets killed. Another example of potential UK application of EU laws while one suspects lesser observance east of the Channel. Also I can not see what a so-called financial transactions tax has to do with regulating fiscally-delinquent countries. Let them get straight first then see if there is a need for Frankfurt to grab business away from London. Jonembi

  2. But the deal contains nothing on a Tobin Tax (and the UK already has a veto on the introduction of a Tobin Tax or other FTT under the current treaties). So Britain didn't need to veto this deal to prevent a FTT from being brought in, which is part of the reason why the veto pissed off traditional allies like Sweden. (I think the Germans really do see the kind of financial sector in London (though it went on in Germany too) as "sinful" (the German word for debt is the same word for guilt), and they really do want to curb that kind of financial activity).

    The new fiscal compact deal has no provisions on setting common tax policy or common spending - it just* sets limits on the deficits of Eurozone members, with Commission oversight. It wouldn't affect the non-Eurozone members.

    *It would still be a big step forward in integration for Eurozone members, though.