THE GERMAN chancellor and the British prime minister have agreed to disagree on key issues of EU reform, but have promised to reach agreement soon on German proposals for treaty change and an EU financial market tax.
After talks in Berlin yesterday David Cameron backed Germany’s attempts to boost competitiveness in EU economies but, under pressure at home, he distanced himself from Germany’s proposal for closer budgetary oversight.
“It’s obvious we don’t agree on every aspect of European policy, but I’m clear that we can address, accommodate and deal with these differences,” said Mr Cameron after talks. “We had a discussion about the issue of the treaties. Germany has her interests and so does Britain.”
Any major treaty change is likely to trigger calls from Mr Cameron’s Conservative MPs for a referendum under new legislation aimed at preventing the transfer of competences from London to Brussels.
Acknowledging that “every day counts” in the euro zone crisis, Angela Merkel said Europe must work with the existing tools at its disposal to fight the debt crisis – borrowing Taoiseach Enda Kenny’s words from earlier in the week.
Her call for binding budget enforcement would “involve only limited treaty change for members of the euro zone”, she said, “and only for them”.
The British leader said he supported “decisive action” to give the European Financial Stability Facility bailout fund “meaning and punch” – if necessary through ECB support.
The German leader rebuffed the call, as she did earlier in the week with Mr Kenny.
“You can only win back credibility by using the strength that you have,” she said. “You have to be careful not to pretend to have strength that you don’t have, because the markets will quickly come to realise that it’s not going to work.”
Mr Cameron rebuffed Berlin’s call for an EU financial transaction tax as a danger to the City of London.
“A global financial tax is acceptable if everyone does it together,” he said. “The danger, we have always believed, is in driving transactions to jurisdictions where it doesn’t apply.”
Both leaders said they opposed plans to increase the EU budget beyond the current rate of inflation as out of keeping with the economic reality. Despite differing views, the two leaders vowed to work together closely ahead of next month’s EU summit.
Amid reports of bilateral tensions, the two leaders rebuffed with visible enjoyment attempts by the British press pack to generate some friction.
Holding up a copy of yesterday's Bilddaily, a British television journalist repeated the question it posed in large letters: "What does Britain want in the EU anyway?" "This press conference is an answer to the question posed today in a big German newspaper," said Dr Merkel, lobbing the question right back. "The fact that we are standing here makes clear that Great Britain and Germany need each other."
Yesterday’s press conference, although light on substance to the point of being throwaway, was filled with striking language.
Dr Merkel’s chief whip Volker Kauder caused a storm in Britain this week for suggesting Europe “now speaks German”.
He intended to say that, where once leaders vowed to deal with debt with euro bonds, European leaders increasingly use Dr Merkel’s arguments: tackling the crisis by reducing debt and boosting competitiveness. Yesterday the German leader nodded approvingly as Mr Cameron spoke.
“I very much agree with what Angela has said: a long-term solution has to involve proper rules for fiscal discipline so that we can’t create this mess again,” said Mr Cameron, to an approving smile from the chancellor.
Then, with a blink, he added hurriedly: “In the euro zone, obviously. Britain is not in the euro zone and is not planning to join.”