PRIME Minister David Cameron risked infuriating his own party last night as he called on European leaders to take swift action towards creating banking union in the eurozone.
The comments made at a dinner of the heads of EU governments at a summit in Brussels came amid more turbulence in Greece, where a general strike was called to oppose austerity measures imposed as a condition for the country’s bailout package.
Mr Cameron’s call for banking union and much closer integration in the 17-country currency zone comes just days after London mayor Boris Johnson, seen as the main potential rival for the Tory leadership, called for a government U-turn on the policy arguing that it would severely damage UK interests.
He said: “Government support for greater fiscal union wouldn’t just be misguided, it would be wrong.”
While the UK would remain outside any banking union and the euro itself, there are fears eurozone rules could in effect dictate to Britain’s financial sector. There is continued disquiet in Tory ranks about Mr Cameron’s refusal to back an in/out referendum on the EU.
Mr Cameron and Chancellor George Osborne have mainained that closer integration and swift action in the eurozone is in Britain’s interests because it represents the UK’s biggest export market, which is being damaged by the continuing crisis in the single currency.
Last night, Mr Cameron told fellow EU leaders that Britain backed the plan, including sweeping supervision, not just for the biggest banks but smaller institutions too.
Over dinner, he was setting out the need for a single supervisor to govern the eurozone and for a comprehensive system of resolution funds – to cover the wind-up of failing banks – and deposit guarantees to restore stability and credibility.
None of the measures would affect non-eurozone countries, but Mr Cameron was seeking assurances that further eurozone integration would not be at the expense of the single market. Arriving at the summit, the Prime Minister said: “We’re in a global race. We need to make sure that we’re competitive, we need to make sure the European Union is competitive. And that means deregulation, cutting the costs of regulation, supporting enterprise.
“It means doing trade deals with the biggest economies in the world, the United States of America, Japan, the fastest growing countries in the world.
“And above all it means completing the thing that matters most for us in Europe, which is the single market.”
British pressure to keep up the pace in the face of the continuing economic crisis in Europe came as French president François Hollande effectively told Britain not to try to dictate to the eurozone.
Mr Hollande said: “Certain countries don’t want to join [the eurozone]: that’s their choice. But why should they come telling us how the eurozone should be run?”
German chancellor Angela Merkel is pushing a proposal that the European Union’s monetary affairs commissioner should become an enforcer of the bloc’s budget rules – including the power to refuse member countries’ proposed spending.