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EU's Barnier says hopes Britain joins fiscal pact
December 14, 2011 / 3:53 PM / 6 years ago

EU's Barnier says hopes Britain joins fiscal pact

BRUSSELS (Reuters) - One of the EU’s top officials said on Wednesday he hoped Britain would join other states in an agreement to tighten euro zone budget controls, and played down concerns about “discriminatory” rules being imposed on London’s financial sector.

European Union's Internal Market Commissioner Michel Barnier addresses a news conference in Brussels December 7, 2011. REUTERS/Thierry Roge

British Prime Minister David Cameron last week refused to join the EU’s other 26 member states in backing a new fiscal treaty for the euro zone, saying it was not in Britain’s interests, a decision that has left the country isolated.

In exchange for his support, Cameron had demanded extra protections for Britain’s financial services industry, which accounts for about 10 percent of its economic output and employs tens of thousands, but other EU states refused the demand.

Michel Barnier, the commissioner in charge of writing the financial regulation that has antagonized the British government, said he wanted London to be involved and that Britain had nothing to fear from the EU’s regulatory agenda.

“I personally regret that the United Kingdom is not in the agreement (of 26) and so I would have liked it to join,” Barnier told Reuters in an interview.

“It’s not in anyone’s interests, neither those of the United Kingdom nor of Germany or France, to see the creation of new divisions or misunderstandings,” he said, adding that Britain had a central role in the “European project.”

“All the countries that want to, and the door is still open, will work on this economic coordination of the euro zone to make the euro zone function better,” said the former French minister, now responsible for the single market that allows free movement of goods, people and services within the EU.

“It is in the interest of the single market that there is better coordination of economic policy.”


Barnier signaled he was ready to discuss the regulatory demands that Cameron had made at last week’s summit of EU leaders, although he said some requests may not be acceptable.

New regulation from Brussels -- spanning rules to control hedge funds to bankers’ bonuses -- has been a growing source of concern in Britain. As Europe’s top financial centre, London stands to lose the most from such changes.

“With regards to Britain’s demands concerning financial regulation, some can be discussed, others merit explanation and some, if they were to impact the effectiveness of the single market, would be difficult to accept,” Barnier said.

For example, he was open to discussing the issue of whether new bank capital rules should be flexible. Britain is arguing that national governments should retain the autonomy to impose stricter standards on their own banks than those foreseen by EU law.

“There can be no discrimination in the single market,” said Barnier, the EU commissioner for the internal market. “That is a guarantee that we must give.”

Barnier also said he would press ahead with a proposal for a new law that could let supervisors impose losses on the bondholders of a flagging bank.

The announcement of details of the draft law -- which has echoes of a similar idea to share losses with the owners of sovereign bonds -- has so far been delayed, for fear it will panic markets. Barnier said he would unveil it at the start of 2012.

Asked about the inclusion of provisions on losses for bank bondholders, he said: “We still have this idea and this is part of the overall toolbox.”

Reporting By John O'Donnell; Editing by Rex Merrifield and Catherine Evans

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