9 Dec 2011

Years of UK blackmail could be at an end – source

Britain made demands on protections or special measures for the City that no-one in government I have spoken to thought would get past our EU partners. The single market is supposed to be a level playing field and we tried to set up a new off-side rule for financial services mid-match, because we’re convinced most EU members are engaged in destructive and persistent moves against our financial centre status.

As a result of the veto, David Cameron has won the support, on Radio 4 this morning, of backbenchers like Mark Reckless, a Tory MP who is a member of the “better off out” group and called this morning “a very significant moment” – he said he now feels the UK appears to be on a route out of the EU.

Lord Owen seemed to be saying that he thought David Cameron’s leadership was “chaotic” and that we needed a government of national unity.

One European Commission source described to me how the eurozone countries would not be stymied by Britain’s veto and would, even though they haven’t got an agreement of the 27, use the EU institutions of the 27 anyway (in defiance of what Britain is saying) even if it meant going an indirect route to use them.

They also said that it was deluded of the UK to think that with the 17 going it alone they wouldn’t – potentially joined by others – be operating a single market within the single market. My source said they felt that “years of blackmail” by the UK coming to EU meetings wielding handbags or performing histrionics could be coming to an end – i.e. the “in-out” decision for the UK just got a whole lot closer.

So what is the UK strategy on Europe now that Europe is intent on changing?

William Hague has been talking (on the Radio 4 Today programme) about the UK still having allies in Europe and not being “isolated.” I suspect it won’t feel much like that and President Sarkozy will be amongst those trying to make sure it doesn’t. The briefing from France against the UK was bilious yesterday.

Of course, the eurozone countries could be on a different, darker journey which would bring darkness on us all.

How is the eurozone doing in restoring faith in the markets, last night’s main business? Not well, on the basis of what we’ve seen so far this morning.

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