European Council

Part of Oral Answers to Questions — Communities and Local Government – in the House of Commons at 3:33 pm on 17th December 2012.

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Photo of David Cameron David Cameron The Prime Minister, Leader of the Conservative Party 3:33 pm, 17th December 2012

Before I make my statement, I am sure the whole House will join me in wanting to send our deepest sympathies to President Obama and the American people following the desperately tragic shootings in Connecticut on Friday. These are heartbreaking scenes. One can only imagine what the families are going through, and our hearts should go out to those families and the friends of all those involved.

Last week’s European Council discussed further economic and monetary integration for the eurozone. It endorsed new safeguards that will protect the interests of countries outside the eurozone. It also reached new conclusions on our response to the crisis in Syria, and there were discussions on growth and defence. This was the seventh European Council of the year. I would not describe it as a landmark Council, and I will try to address these points briefly.

The problems of the eurozone are driving heated discussions between its members and are leading to potentially significant changes inside the European Union. There are calls from some for greater solidarity and burden sharing, and from others insistence on tough rules for fiscal discipline. These arguments raise far-reaching questions of national sovereignty, and it is yet to be determined how far or fast the changes will go, but it seems likely that we will see a process of further integration for members of the eurozone.

Britain will not join the single currency—neither will we join the deeper integration now being contemplated—but these changes, driven by the eurozone, will alter the European Union for all of us, so they need to be done in the right way. That should mean flexibility over how Europe develops to accommodate the interests of all member states—those inside the euro, those that might one day join and those, such as Britain, that are outside, have an absolutely clear opt-out and have no intention of joining. It also means that as eurozone members make the changes they need, we in the UK will have the ability to argue for the changes that we need in our relationship with a changing European Union in order to get the best possible deal for the British people.

The banking union, elements of which were agreed last week, is a good example of that. A single currency needs a single system for supervising banks, so Britain supported the first steps agreed towards a banking union, but in return we and others demanded proper safeguards for countries that stay outside the new arrangements. The European Council therefore agreed a new voting system that means that the eurozone cannot impose rules on the countries outside the euro area, such as Britain, without our agreement. There is also an explicit clause that says that no action by the European Central Bank should directly or indirectly discriminate against those countries outside a banking union. That is vital for our financial services industry, which must continue to be able to provide financial products in any currency.

The Bank of England and the ECB will have a statutory memorandum of understanding that will ensure they work co-operatively and openly to supervise cross-border banks. The safeguards set an important new precedent in giving rights to countries that choose to stay outside the euro. In winning that argument, we have demonstrated how a change necessary for the eurozone can lead to a change for countries outside the eurozone that can help us to safeguard the things that matter to us in Britain, in particular the integrity of the single market. And as the eurozone makes further changes, I will seek every opportunity to get the best deal for Britain and for the single market as a whole.

On growth and competitiveness, this year we have already secured a proper plan, with dates and actions, for completing the single market in services, energy and digital, a commitment to exempt small businesses from new regulation, the establishment of a European patent court, with key offices in London, which will save businesses millions of pounds, and a new free trade agreement with Singapore. In addition, we have launched negotiations on a free trade agreement with Japan that could increase EU gross domestic product by €43 billion a year. The conclusions from the Council have the additional benefit of referring to Commission plans to “scrap” some of its own

“regulations that are no longer of use.”

We are taking action in Europe that will help with growth and jobs and with tackling unemployment here in the UK.

On defence, we are clear that NATO is the cornerstone of our defence and that EU co-operation should avoid costly new bureaucracy and institution-building. We will never support a European army. The focus of the Council conclusions is entirely consistent with this, referring to practical co-operation to tackle conflict and instability in places such as Kosovo and the horn of Africa. In addition, the conclusions welcome proposals to open up closed defence markets in Europe, which could be of benefit to Britain.

Finally, I turn to Syria. As a result of Assad’s brutality, a humanitarian crisis is unfolding in Syria on our watch, with more than 40,000 dead and millions in need of urgent assistance as a hard winter approaches. There is a moral imperative to act—and Britain is doing so, as the second-largest donor in terms of humanitarian aid—but there is also a strategic imperative to act. Syria is attracting and empowering a new cohort of al-Qaeda-linked extremists, and there is a growing risk of instability spreading to Syria’s neighbours and of drawing regional powers into direct conflict.

We therefore cannot go on as we are. The Council was clear, as Britain has been for many months, that Assad’s regime is illegitimate, and committed to working for a future for Syria that is democratic and inclusive, with full support for human rights and minorities. We will continue to encourage political transition from the top and to support the opposition, who are attempting to force a transition from below, and that will include looking at the arms embargo. The conclusions also make it clear that we must now explore all options to help the opposition and to enable greater support for the protection of civilians.

With progress on Syria, our objective on banking union secured and the principle established that changes in the eurozone require safeguards for those outside, I commend this statement to the House.