2 Dec 2011

New treaty to prop up eurozone?

Germany’s leader Angela Merkel wants a new treaty and a “fiscal union” to save the eurozone from collapse, but new rules in Europe could see David Cameron face a backbench revolt.

At talks in Paris David Cameron and Nicolas Sarkozy discussed the sovereign debt crisis which is crippling Europe and threatens to drag Britain back into recession.

On the table was the possible reorganisation of how the eurozone is run. German Chancellor Angela Merkel has called for a new EU treaty to set up a “fiscal union” which would impose budget discipline.

“We have started a new phase in European integration,” Mrs Merkel told the German Bundestag, adding that it would be a long process.

Earlier this week Mr Sarkozy said a revised treaty was necessary to protect Europe’s place in the world.

However, such a move could marginalise Britain’s influence in the European Union (EU) and see Cameron face the wrath of eurosceptic Tory backbenchers.

He said earlier that he is not convinced the changes are needed.

He added: “I’m very clear if there is treaty change then I will make sure that we further protect and enhance Britain’s interests.

“The bottom line for me is always what is in the interests of the UK and how can I promote and defend that.”

The move will be considered by the European Council at the end of next week, but eurozone power-brokers Germany and France will agree a plan of action on Monday.

Any reforms of the Maastricht treaty rules governing the eurozone will have to be agreed by all 27 members of the EU.

Downing Street said it was waiting to see the options paper for reform which European Council president Herman van Rompuy is drawing up for next week’s gathering.

Mr Cameron’s official spokesman said: “Primarily what is being looked at here is rules for the eurozone.

“As with any negotiation in Europe we have to wait and see what is being proposed and see how we will respond.

“We will always look to further our national interest.”

Back in Britain, Chancellor George Osborne called on the 17 eurozone nations to “stand behind their currency” and find a solution to the sovereign debt crisis to allow “economic recovery across the continent”.

Read more from Channel 4 News: The eurozone debt crisis that keeps repeating itself?