UK’s £3bn rebate is not negotiable, Cameron tells eurozone leaders

Published on 29/06/2012 01:28

PRIME Minister David Cameron went on the attack last night as he sat down with fellow European leaders in Brussels demanding that the UK receives safeguards from further integration of the eurozone.

At the last summit in Brussels Mr Cameron wielded the British veto to block a new treaty because of fears it would undermine UK interests.

And Mr Cameron’s opening gambit was to make it clear that the £3 billion British rebate, negotiated by Margaret Thatcher, is not up for negotiation.

“That is not an issue we are willing to negotiate,” one UK official said. “We think that as we enter into this process it is important people have absolute clarity about our position.”

The Prime Minister is arguing for “restraint” in the budget negotiations, pointing to the difficult decisions national governments were having to take as they grappled with their deficits.

But the summit looks set to be dominated by splits within the eurozone over how to deal with the crisis which is threatening to engulf the 17-state currency union and whether to press ahead with banking union.

Mr Cameron has called on the 17 euro countries to go ahead with the plans, but made it clear Britain would be outside any banking union arrangement.

But the debt focus at the summit was on Italy where prime minister Mario Monti is under pressure to cut debt payments, but is also being criticised by his predecessor Silvio Berlusconi for his lack of a growth plan.

However, the main clash came between French president François Hollande – who wants more help for Italy, Greece and Spain – and German chancellor Angela Merkel, who is resisting calls to relax austerity.

Mrs Merkel is insisting on maintaining rigid rules on job cuts, tax rises and repayment terms for those nations benefiting from multi-billion-euro bailouts, largely funded by Berlin.

Mr Hollande has said the demands are so tough they are stifling all prospect of recovery.

To appease France, Mrs Merkel agreed the need for a £104 billion “compact for growth” which is expected to be adopted by all 27 leaders in a final summit declaration tomorrow. But Germany is resisting the idea of pooling the eurozone debts in order to lower the risk.

The move would reassure jittery markets that the single currency has sustainable back-up.