Asked for the Prime Minister’s response to the Scottish First Minister’s comment that Scotland had been left out of the European Council discussions, the Prime Minister’s Spokesman (PMS) said we would respond to his letter when we received it; but foreign affairs was a reserved matter. The handling of those issues was a standing item at regular meetings of the joint ministerial committee on the European Union which all the devolved administrations attended.
Asked if the 17 Eurozone countries would be allowed to use European Commission buildings, the PMS said there was an agreement on Friday morning about a new fiscal framework for the Eurozone. Eurozone countries had set out a series of rules that they intended to sign up to. There was now a discussion about how that was implemented and that would go on for some weeks. One of the issues was the role of the institutions in implementing the agreement. The PMS added what was very clear was that the institutions should not do anything that cut across the single market.
Asked if that would be a discussion of 17 Eurozone or 27 European Union countries, the PMS said the UK would take part in discussions we had an interest in. The institutions were established by the European Union Treaty so we had an interest. As the Deputy Prime Minister had said yesterday, we were into uncharted territory. There would be a discussion about how the agreement would be implemented.
Asked if our demands were now dead and gone, the PMS said there was a discussion about whether or not there was a Treaty at 27. On balance we would have preferred a Treaty at 27, but we were clear that we could only have agreed to that if certain reasonable conditions were met. The PMS said that the things the UK was trying to achieve last week were still objectives. We sought a level playing field in financial services, not as some had said some sort of carve out for the City of London. He added that the UK also wanted to go further with banking regulation in certain areas. He added that there was some legal uncertainty about whether we could go further and implement the Vickers conclusions. The PMS said most of these issues were discussed at Economic and Financial Affairs Council (Ecofin) and the Chancellor of the Exchequer attended those meetings.
Asked about a claim that the UK veto had been a blessing for the French, the PMS said there had been a preference around the table for a Treaty of 27. Asked about the Deputy Prime Minister saying on Thursday that he worked hand in glove with the Prime Minister and if that was still the case, the PMS said we had an agreed negotiating position. He added that it was no secret that there could be an agreement among fewer than 27 countries. That possibility had been discussed and debated at length including by the media. There was an agreed negotiating position and it included the different options.
Asked if the negotiations could begin again, the PMS said the discussion on implementation had just begun. He added that the Eurozone countries agreed the new rules, including automatic sanctions, but they had not yet agreed how that would be implemented, and the use of institutions was part of that discussion. He added that we always aimed to balance constructive engagement with the need to protect our national interest; that was what was set out in the Coalition Agreement, and that continued to drive our policy. There would be negotiations in the European Union in the course of the Parliament; the Government would agree the position in advance of those negotiations.
Asked if the safeguards were still desirable, the PMS said fundamentally what was in our interests was a stable Eurozone and one that had dealt effectively with the debt crisis. That required implementation of other things too - a firewall, action to recapitalise the banks and measures to address the underlying issue of competitiveness. New rules were only part of the answer.
Asked about a comment that the UK was in danger of becoming like the Channel Islands, the PMS said there was going to be a lot of debate and he would not respond to every point individually. Our policy had not changed. We would engage constructively in European discussions and pursue our national interest.
Asked if it was accepted that European Commission buildings could be used by those countries which had reached agreement, the PMS said that it was uncharted territory; there was a discussion going on about how the agreement would be implemented, but that the UK would engage constructively.
Asked to explain how a Treaty within a Treaty would have an impact on our position in the single market, the PMS said there would be some objectives for 17 and some for 27; this would have strengthened that because of the scale of the Eurozone agreement. The PMS said there were issues we would be concerned about, including the potential for conflicts of interest that needed to be explored. There would not be an issue if the interests of the 17 and 27 were always 100 per cent aligned, but that may not always be the case.
Asked what the Prime Minister thought about the markets’ reaction to the agreement, the PMS said the markets would make their own judgments on these things.
Asked about the Deputy Prime Minister’s use of language about the summit, the PMS said that if you listened to the Prime Minister and Deputy Prime Minister before the Coalition was formed, you would have noted a different approach on policy towards Europe. A Coalition Agreement set out the position of the Government; and when it came to what was discussed at the end of last week, clearly there had to be an agreement ahead of those discussions to ensure a very clear position in the negotiations. The PMS said the Coalition Agreement set out policies in a number of areas where the Government had agreed to implement them, but other things would happen which the Government would need to respond to. There had to be agreement as to how these things would be handled.
Asked if the Prime Minister was relaxed about the Deputy Prime Minister’s comments, the PMS said that things would happen that had not been anticipated. The Coalition Agreement did not forecast everything that would happen in the world in the next five years. There were committees so that the Coalition could discuss an agreed policy in relation to a whole range of things that had not been anticipated.
Asked if the Deputy Prime Minister would be invited to these European Council meetings, the PMS said heads of state and government attended that meeting. Asked why the Foreign Secretary was there, the PMS said he had not attended the meeting; there had been a NATO summit and he had stayed over night.
Asked if the Business Secretary had warned the Cabinet in Ipswich last Monday that the City should not be a make or break issue, the PMS said he hadn’t gone to Ipswich, but the media should check with political colleagues that he had.
Asked if the Prime Minister spoke to the Chancellor but not the Deputy Prime Minister while the talks were still ongoing, the PMS said he had not made any calls while the meeting was taking place. He said he had conversations with the Chancellor and the Deputy Prime Minister after the meeting. Someone from the Prime Minister’s office had spoken to someone from the Deputy Prime Minister’s office before the talks had concluded, to give them a sense of where we thought things were going, not least because we wanted them to wake up the Deputy Prime Minister, but the Prime Minister did not speak to the Deputy Prime Minister until the meeting was over.