The chances of Britain leaving the EU rose dramatically last night after it emerged that one of David Cameron’s closest Cabinet allies believes it is time to tell Brussels bluntly: ‘We are ready to quit.’
Education Secretary Michael Gove has told friends that, if there was a referendum today on whether the UK should cut its ties with Brussels, he would vote to leave.
He wants Britain to give other EU nations an ultimatum: ‘Give us back our sovereignty or we will walk out.’ Mr Gove insists the UK could thrive as a free trading nation on its own, like other non-EU nations in Europe such as Norway and Switzerland. He has changed his view partly as a result of his fury at Brussels meddling which has held up his school reforms. Mr Gove, one of the Prime Minister’s closest confidants, has discussed his views in detail with Mr Cameron. In an anti-EU pincer movement by the two Tory allies, Mr Cameron will formally announce later this month the first major step towards grabbing back powers from Brussels. He will set out in detail how he plans to withdraw Britain from EU justice ties, but he will then ‘cherry pick’ which aspects of Anglo-EU legal co-operation he believes are in British interests. These could include the European Arrest Warrant (EAW), access to police databases, prisoner transfers and co-operation over drugs trafficking and money laundering. The disclosures are the latest evidence of a turning point in Britain’s relationship with the EU, which is currently gripped by the euro crisis.
Mr Cameron has struck an increasingly tough stance. He won plaudits for vetoing changes in the EU Treaty, has edged closer to pledging an ‘In or Out’ referendum, and suggested Brussels should have two budgets, one for eurozone nations and another for non-eurozone nations such as the UK....UPDATE - European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area......
Friday's announcement is a disappointment for some officials at the European Commission, the EU's executive arm, who had hoped to have the supervisor operational at the start of 2013.
The leaders also discussed plans for a common budget for the 17 euro-zone nations that could be used to absorb economic shocks impacting one part of the euro zone but not others. But José Manuel Barroso, the commission president, said: "This is something for the medium and longer term."
Friday's announcement is a disappointment for some officials at the European Commission, the EU's executive arm, who had hoped to have the supervisor operational at the start of 2013.
The leaders also discussed plans for a common budget for the 17 euro-zone nations that could be used to absorb economic shocks impacting one part of the euro zone but not others. But José Manuel Barroso, the commission president, said: "This is something for the medium and longer term."
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I don’t understand why the British press doesn’t recognize the life hazard for the City by these “agreed” banking union regulations with the outspoken objective that for the British financial industries the gateway to the Euro zone shall be closed and thus the City loses its main advantage for investors and gamblers against other financial centres, like Singapore.
So the next step - by the end of the year - will be, that once the "legal framework" for the banking regulator is established, the South (and that includes France) will right away demand funds from the ESM for the recapitalization their banks.
So the safety catch of "conditionality" will be softened every inch of the way, towards the ClubMed Nirvana, that is unlimited access to the money of the North. Barely camouflaged with some fig leafs of "commitment to reform".
The whole damn things turns out to be a second version of German reunifaction thingy, paying up for decades of utter deliberate mismanagement of now deeply failed economies that are incapable (and unwilling) of dealing with a hard currency and sound economic behaviour.
Only on a much greater scale.Times 10 or so.
And with much less control over the spending.
What again were the reunification costs? Ah yes, some 2.000.000.000.000 € . Now that amount times 10 is.........
The USE or EUSSR or whatever you want to call it really has arrived now.
The ESM has come in, and the EU banking union has now been agreed with far more ramifications than anyone thought possible. Essentially Spanish bank failures are now every bit as much a problem for Germany as a German bank failure. France, not in a position itself to absorb Spanish banking losses, will absorb them.
The overall effect of the banking union will be to achieve fiscal union. Just like the USA, if Bank of America (headquarted in North Carolina) fails then all states are affected equally. Effectively, sovereignty will rapidly disappear in all EU member states to be replaced with something akin to "Territorial Governorship" with powers even more limited than US states.
Where does this leave the UK? Its called an EU banking union, not a Eurozone banking union so will the UK financial sector now be swallowed up into the EU? How much difference will it make that the UK has its own currency? Does the UK want the EU anymore? Does the EU want the UK? All the masks are off now and if the British people cannot see what the EU really is, a planned Totalitarian Federal Sovereign state, then the British are blind and will get what they deserve. If that is what the British people want, then fine, but at least don't go into it blind like getting married and sublimating the fact that your wife is a vampire by night.
Everyone always said the EU would use the financial crisis to its advantage. And so now it has.
What are the next steps for the UK?
Apparently Britain is waving "bye-bye" to the European Union, well that is according to Finland's Europe Minister Alex Stubb.
Speaking at the EU Summit, Mr Stubb said Britain appeared to be purposefully putting itself at odds with its partners."
The Finns don't say much but when they speak, others listen.
Add to that the report in Spiegel (in English) about Merkel's belief that the UK 'is on the way out of the EU' and Cameron's recent utterings, the great majority on these pages might get the reward they have asked for, even without a referendum. UKIP's raison d'etre would disappear.
2013 promises to become a very interesting year, indeed.
Megan Greene, eurocrisis expert at Roubini Global Economics, is not too impressed with the details of the eurozone banking deal.
Speaking on Bloomberg TV just four hours after the summit broke up for what remained of the night, Greene explains:
Leaders have agreed to agree on the issue of banking supervision, which is something they have done before.
They're going to establish the legislative framework by the end of the year - but we need to see how bank recapitalisation will work.
Greene believes that the EU's failure to agree a timescale for the recapitalisation of eurozone banks is a "victory for Merkel".
She also argues that Europe still has a long way to go on fiscal union and political union, even if it is making some strides on banking union.
French president François Hollande has taken a quite different approach from Angela Merkel (see 8.09) - showing the two leaders have not patched up their differences during the summit.
Paris is welcoming the news that the eurozone will have the legal framework for a banking supervisor by 1 January 2013 -- and arguing that bank recapitalision could follow soon afterwards.
Hollande told reporters that:
The quicker the mechanism is in place, the sooner recapitalisation can take place.
The German chancellor insisted she was right not to allow the new eurozone banking supervisor to immediately start pumping capital into (to take just one example) Spain's battered banks.
Merkel's argument is that it's better to get banking supervision right, rather than to do it quickly "in one or two months."
Our goal is banking supervision that’s worthy of the name, because we want to create something that’s better than what we currently have.
But a slower approach is also politically attractive to Merkel - who faces a general election in autumn 2013.
European leaders committed to their goal of establishing a euro-area bank supervisor by year-end, opening the prospect of direct aid to Spain’s banking sector.
The EU will seek to agree on a framework that makes the European Central Bank the main supervisor by Jan. 1, according to conclusions released early today after leaders met at a summit in Brussels. The new system, intended to break the link between banks and governments at the root of the region’s financial crisis, will phase in over the next year and could cover all 6,000 euro-area banks by Jan. 1, 2014.
European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area......
Friday's announcement is a disappointment for some officials at the European Commission, the EU's executive arm, who had hoped to have the supervisor operational at the start of 2013.
The leaders also discussed plans for a common budget for the 17 euro-zone nations that could be used to absorb economic shocks impacting one part of the euro zone but not others. But José Manuel Barroso, the commission president, said: "This is something for the medium and longer term."
Another late night, back room deal to please the press. Why don't they sit down like adults, hammer out a deal properly have it legally checked, THEN AGREE and give a Press Conference.
I am not at all a specialist of how those kind of meetings take place but I suspect you're not one either and I find your view of those naive. When leaders begin their meeting, they have had several options worked by staff, said staff have worked together to check what are the red lines for each country, there has been some legal check and the meeting is only there as a final deal of negotiation.
For example, the compromise seems to be quite long deadlines so as to have a robust supervision in place vs. all banks supervised plus an important role for national supervisors but the ECB can intervene whenever it wants. If it were completely impossible for Germany to agree to those terms, it would have been known far in advance.
So maybe the deal will crumble in three months, because of new events for example, but the systematic doom you have seems unguaranteed to me.
EU leaders have made progress overnight on the knotty problem of regulating the region's banks. The 22nd emergency summit to be held since 2010 agreed to put in place the legal framework to created a single banking regulator to oversee all the eurozone's 6,000 lenders. This is a real step forward, according to French leader Francois Hollande, "Tonight, I have confirmation that the worst is behind us. We are on track to solve the problems that for too long have been paralysing the eurozone and made it vulnerable."
There are a lot more details to be thrashed out. We'll bring you all the latest news here.
The news is just one item likely to be under discussion at the Telegraph Festival of Business today. The one day conference will bring together business leaders including former Tesco chief Sir Terry Leahy, Jim O'Niell of Goldman Sachs Asset Management and business minister Michael Fallon. The event will have particular focus on growth and exports. More here throughout the day.
Ofgem has joined Dave Cameron, pressure groups and consumers in the increasingly pointed debate about energy bills. In a report revealed this morning the regulator has said suppliers will have to provide more straightforward tariffs and could be forced to recommend customers move to a different supplier. Companies will be able to provide just four gas and four electricity tariffs and will have to move customers off so called "dead' tariffs they have sat on for years.
EU leaders have agreed to set up a single eurozone banking supervisor - a major step towards a banking union.
A legislative framework is to be in place by 1 January next year, with the body starting work later in 2013.
The European Central Bank-led mechanism will have the power to intervene in any bank within the eurozone.
The deal appears to be a compromise between France and Germany, who earlier disagreed over the timing and over the number of banks the ECB would oversee.
The timetable remains important, because only when the body is fully operational will the eurozone's rescue fund inject cash directly into ailing banks - so important for countries like Spain, says the BBC's Europe editor, Gavin Hewitt.
The deal was, at best, an uneasy compromise between the French and Germans and much wrangling lies ahead, our correspondent says.
France and the EU Commission wanted joint banking supervision, with the ECB in the lead role, to become operational in January 2013
New ECB clout
Announcing the result of talks early on Wednesday, European Council President Herman Van Rompuy said the 27 EU member states had agreed to set up - by the end of this year - "a Single Supervisory Mechanism [SSM], to prevent banking risks and cross-border contagion from emerging".
"Once this is agreed, the SSM could probably be effectively operational in the course of 2013," he said.
EU Commission President Jose Manuel Barroso said that the ECB "will be able to intervene if needed in any bank in the euro area".
With new supervisory powers the ECB would be able to act early on to prevent a systemically dangerous accumulation of debt on a bank's balance sheets.
Continue reading the main story
Banking union - Three-stage plan
Single supervisory mechanism (SSM)
Joint resolution scheme to wind down failing banks
Joint deposit guarantee scheme
Peston: UK mugged by eurozone?
Broken banks put eurozone in federal mood
And once the legal framework is in place the new permanent rescue fund, the European Stability Mechanism (ESM), will be able to recapitalise struggling banks directly, without adding to a country's sovereign debt pile.
ECB supervision will not extend to the UK - Europe's main financial centre, but outside the euro.
However, the BBC's Business editor Robert Peston says there is now a serious risk that the UK will always be outvoted when decisions are taken on the regulation of banking and finance in the EU as a whole.
It is more than a theoretical possibility that the interests of the UK and City of London in shaping financial rules will be systematically ignored or overridden, he says.
Fraught with complications
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European Council President Herman Van Rompuy says they now have an objective
EU leaders agreed that the ECB's new bank supervisory responsibilities would be strictly separated from its role in setting monetary policy.
The banking union plan is fraught with legal complications, as it would give more powers to the ECB and possibly weaken those of national regulators.
There is speculation that it could lead to treaty changes - something that has caused big headaches for the EU in the past.
The UK wants safeguards to protect the powers of the Bank of England.
Mr Barroso said the arrangement would be "as inclusive as legally possible for non-euro members to join if they want to".
Earlier, Mrs Merkel called for the EU to be given the power to veto member states' budgets. She said the EU economics commissioner should be given clear rights to intervene when national budgets violated the bloc's rules.
EU leaders at a Brussels summit agreed Thursday to create a single mechanism for overseeing eurozone banks that will be rolled out during 2013, according to diplomats. France and Germany had been at odds over the issue leading up to the meeting.
German diplomats say leaders meeting in Brussels have reached agreement on creating a powerful single supervisor for eurozone banks and the plan will be implemented at some point next year.
France and Germany have been tussling over how to best shore up Europe's struggling banks. France wanted a single supervisor in place by the end of this year - because that would allow Europe's bailout fund to directly loan money to banks, a key tool in fighting the crisis.
But Germany has been dragging its heels because it's nervous about such loans.
The diplomats said leaders reached agreement Thursday night to draw up the legal basis for the supervisor by the end of this year. They will then put it into place sometime in 2013.
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