Merkel and Cameron duel over Europe

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Merkel and Cameron duel over Europe

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Clashing views on a European model to repair the debt crisis appear to have reached new heights. German feelings on federalism this week chafed with British individualism and Downing Street’s suggestions about repatriating certain policy-decision powers from Brussels.

Berlin wants to speed up revision of the EU’s Lisbon Treaty on how the 27-country bloc works, and have that approved by all of them by the end of next year — in its view for the common good.

Christian Democrat Chancellor Angela Merkel is in the forefront of efforts to see a permanent European mechanism in place to manage financial crises, whereby countries exceeding maximum debt or deficit limits, which were adopted in 1997, would no longer escape disciplinary action — debt 60% of GDP, deficit 3% of GDP and an inflation ceiling of 2%.

On Monday, in the Bundestag in Berlin, Merkel said: “We want automatic sanction mechanisms, the possibility for effective measures if someone infringes the Stability and Growth Pact. For us, this means that we need to further develop the structure of the European Union. This does not mean less Europe, it means more Europe.”

Yet European economic governance proposals raise hackles in Westminster. Conservative Prime Minister David Cameron wants to be certain that the EU goes on being good for British economic interests, and conserves the principle of a union of sovereign nations. He was at the Lord Mayor of London’s banquet on Monday night.

Cameron said: “Now is the chance to ask: what kind of Europe do we actually want? For me, the answer is clear. One that is outward looking, with its eyes to the world not gazing inwards — one with the flexibility of a network, not the rigidity of a bloc.”

British Deputy Prime Minister Nick Clegg warned, however, that European treaty changes in a time of such economic turbulence would antagonise people — and Clegg is pro-Europe. Yet the Liberal Democrat and the Tory Cameron are both firmly against anything that would sap British financial power.

Clegg said: “We can’t support the European financial transaction tax that has been proposed. It would have a massively disproportionate impact on the City of London, responsible for more than half the revenues that would be taxed and according to the Commission’s own analysis, would also reduce EU GDP as a whole.”

Merkel has said she will not accept a British refusal of a European tax on financial transactions, which rather spices up the prospect of Cameron’s visit to Berlin this Friday. Her principle is: national interests must not put Europe’s survival in second place.