I wrote an article for yesterday's Sunday Telegraph. Here is the article in full.
David Cameron was right not to agree to the proposed changes to the Treaty of Lisbon at the latest summit.
The immediate cause of this was that the other EU leaders (in reality Germany and France) refused to give the safeguards that he demanded that they would not impose regulatory and tax changes which would adversely affect the UK’s financial services sector.
He had no choice. Financial services are a far more vital part of the UK’s economy than they are of any European country.
The City provides services to a large part of the world, and financial services are our biggest sector for employment, taxes and exports.
The EU, and Germany and France in particular, envy that position. They would like to divert as much of that activity as they could to Frankfurt and Paris, hence the proposed regulations to move the markets in so-called Over the Counter Products such as foreign exchange, and bonds onto exchanges, like Deutsche Borse and Euronext.
The eurozone leaders also fear the markets because they are the last thing which holds them to account.
Because the eurozone countries are running such large budget deficits they are answerable to the bond markets which are now refusing to supply those funds.
The attempts by the EU authorities to silence the markets by devices such as bans on short selling are a clean sign of their wish to shoot the messenger, but they are ineffective whilst those market are in and regulated from London.
We are told by critics like Labour’s Douglas Alexander that this move has left Britain isolated from Europe. This might be worrying if it were not for the fact so far the Euro has proven to be an unmitigated disaster and there is nothing from this latest in the seemingly endless series of summits to suggest that this will change.
We are told that the whole point of the treaty changes was to ensure that there was some central authority which would ensure that, in future, eurozone countries cannot run up the sort of debts which they now have.
Didn’t we already have such rules in the ironically named Growth and Stability Pact enshrined in the Maastricht Treaty which were disregarded?
Introducing new rules strikes me as like the former Labour government’s approach to knife crime, which was to pass more and more legislation (in 1997 and 2007). Stabbing people was already illegal, what was required was some enforcement.
The same is true of the eurozone - already there are weasel words in the summit agreement about limiting 'structural’ deficits. When you spend more than your income, it’s a deficit. What’s a structural deficit? I suspect it’s a device to ensure there is no penalty when you exceed the limit.
The summit agreement also talks about funding a bailout fund and sending money to the IMF for them to lend to back to the eurozone. This is all circular. If you are spending more than your income, at some point you need some third party to lend you money.
And finally, neither this summit nor any of the others has even sought to address the underlying flaw at the root of the Euro: Greece, Portugal, Spain, Italy, Ireland and even France, cannot make their economies competitive in a currency union with Germany.
So all the UK is isolated from is an impending disaster: the eurozone will fragment with countries leaving and debt defaults. It is like being as isolated as a man who failed to get onto the Titanic before it sailed.
Terry Smith is chief executive of Tullett Prebon and Fundsmith