Angry Osborne refuses to sign EU banks pact
THE FIRST major negotiation on Europe’s most important banking reforms degenerated into a slanging match between the UK and European Commission last night, with both sides refusing to budge from their opposing positions.
Finance ministers had called an extraordinary meeting in Brussels in an attempt to break months of deadlock on a new set of banking rules known as “CRD 4”.
Instead, they ended up arguing late into the night, with chancellor George Osborne complaining that it had caused him to miss hosting a dinner party and saying of the proposals on the table: “I am not prepared to go out there and say something that is going to make me look like an idiot five minutes later.”
But EU commissioner Michel Barnier dug his heels in, suggesting that if Britain would not give in then it would have to go it alone.
It had appeared earlier in the day that the EU’s 27 countries would reach a compromise brokered by Denmark, which currently holds the rotating EU presidency. But despite an increasing number of countries signing up to the UK’s position, including Sweden, Spain and Poland, their opponents – led by Barnier, France and Germany – made no concessions.
At stake is the degree to which national regulators will be allowed to beef up EU capital requirements for their banks without seeking Brussels’ approval. The rules are meant to be based on the internationally agreed Basel III capital rules, but the UK says they diverge widely from that framework.
Osborne insists that Britain needs legal power to toughen up the rules beyond the technical standards in the commonly agreed rulebook. And he also says that the current text outlining those minimum standards is “watered down” from Basel.
“If we walk away from this table with 27 countries all having gotten some kind of concession for their national banking issues, we will have completely failed and it won’t just be a political failure; it will be potentially a serious economic failure for our continent,” said Osborne.