UK and the EU

I doubt if the French or Germans expected David Cameron to wield the veto at the recent Brussels summit. We are in uncharted territory.

The hubris and excitement of the past few days will die, to be replaced by the realisation that not only will it not be business as usual in the EU but that the decisions taken at the summit are the catalyst for profound changes for the UK and the EU.

Monday will see the reaction of the markets to the EU summit and I anticipate it will not be good.  European banks are stretched, the sovereign debt issue has not gone away and the summit did nothing to deal with the current problems.

The decisions which were taken on control and monitoring of eurozone countries budgets will take months to put in place.  Once the horse-trading commences and the realisation that countries will lose their national sovereignty, the facade of unity displayed by the 26 in Brussels will dissipate faster than snow in hell.  Nothing was decided at the summit to deal with the issue of democratic legitimacy or measures for economic growth.  The UK can take some consolation from the fact that we shall not be party to the machinations surrounding the longest economic, social and political suicide note it history.

http://www.telegraph.co.uk/finance/financialcrisis/8949723/Merkels-Teutonic-summit-enshrines-Hooverism-in-EU-treaty-law.html

There is the problem of how the 17 countries in the eurozone (and their supporter countries) will organise their affairs in view of the legal problem that they are acting outside the EU (as a consequence of the UK veto) but are still bound by the treaties. Cameron has fired a warning shot across the bows of the EU and the European Commission on this very point and he is not alone in his opinion.

Outside the specific issue upon which the UK used its veto, the EC and the EU will continue as before.  However there is an attitude developing that the EU, using majority voting, will seek to act to the detriment of the UK and could use its powers to increase financial regulation.  Such regulation would apply to the City.  Should this be the case, then the UK may be forced to consider if it is desirable to remain in the EU.  There are those in the EU who wish to engineer such a showdown.

See: http://www.spiegel.de/international/europe/0,1518,802823,00.html

http://www.spiegel.de/international/europe/0,1518,802933,00.html

http://www.spiegel.de/international/europe/0,1518,802678,00.html

http://www.telegraph.co.uk/finance/financialcrisis/8949403/EU-treaty-Britains-isolation-not-in-Irelands-interests.html

http://www.telegraph.co.uk/finance/financialcrisis/8950685/Like-it-or-not-Britains-veto-was-Germanys-decision-not-Camerons.html