Cameron uses UK veto - what will it mean for us and Europe (and the rest of the world)?

[Callisto]

Just that.

I'm glad that DC had the balls to use the veto - the treaty being discussed would not have been good for Britain and could have been bad. However, the Asian markets have already responded by falling and I'm guessing that that US and Euro markets will fall too. So, are there any economists (or otherwise) out there who can throw some light on what may happen next?

It's certainly going to be interesting, esp wrt what it will do to the coalition, ie pro-europe clegg can't be happy, and tory euro-sceptics feeling vinicated and pushing for referendum. Longer term, I wonder what will happen to london as financial centre, and our relationship with europe in terms of friendly export market. But I'm no expert. Will follow thread with interest.

I've long thought it inevitable that the Euro will split. This will likely be due to the likes of Greece being kicked out but, logically, it would be easier all round for the markets for Germany to leave.

I was reading elsewhere this morning that Greek Euros are massively over-valued. Obviously, at the moment the exchange rate between Greek and German Euros is 1:1, but if the Greeks swapped the Euro for the New Drachma at the rate of 1:1 (i.e. one New Drachma = one Euro) by the end of the first week the exchange rate would be something approaching 1.5 New Drachmas to 1 Euro.

Whichever way it goes there's going to be pain, a European recession and when it all gets sorted out in 2 or 3 years time, we'll find that we aren't as rich as we thought we were. Crucially though, Call-me-Dave has done well. If we can lever a way out of the EU, Britain will be the first of the major European powers to recover.

Mein gott, bon dieu, you guys are naive. I think the DailyHate has got you by the throat. Does nobody get that these hate figures are also known as our major trading partners? You can't MAKE Britain important all on its own again just by wishing for it.

Go Dave!

Sieglinde, given that we import from the European nations, and they won't want to lose that revenue stream, do you really think they will stop selling us BMWs and Audis any time soon?

Hungary and I believe Sweden and the Czech republic have also decided not to sign up. The Finns may not get this through Parliament; the Dutch were not happy about the move to majority voting as opposed to unanimous, and if this means a harmonisation of Corporation tax, the Irish might just not go further with this as well.

There was a great comment by a trader on Radio 4 today:
Following the treaty veto, Terry Smith of interdealer broker Tullett Prebon, didn't mince his words. He told BBC Radio 4:

'[The UK is] as isolated as somebody who refused to join the Titanic just before it sailed'

We all know what happened to the Titanic don't we?

sieglinde, classic Europhile tactic - people have a different view on Europe to you, so they're 'naive' & must take their opinions unthinkingly from the DM. Great level of debating there. I for one & wouldn't use the DM to line the litter tray, but I'm glad Cameron appears to have grown a pair. Even if we were out of Europe, do you think the Eurozone countries would simply stop trading with us? They need us (and our £8 billion subsidy) as much as we need them.

This is really interesting. I've been watching the EU summit coverage without much of a clue what it all means so it's useful to come on here and see other people's thoughts. I'm definitely a Eurosceptic - not anti-Europe which is what most Eurosceptic MPs seem to be - but I have my doubts about how workable it all is. I don't have much time for talk of 'sovereignty' and 'Great British bulldog spirit' but I do feel that the UK needs to look out for itself as well as being pragmatic about keeping friendly links with major export partners.

What I take away from the events of this morning is that the basic EU treaty hasn't changed.. we're still very much 'in' Europe.... but that some sub-treaty designed to force the Eurozone countries to adhere to stricter rules and reducing their ability to create economic policy in isolation has been rejected. As we've never been in the Eurozone, I wasn't honestly expecting us to sign up to this latter agreement. What I would like to understand better, however, is what the 'safeguards' were that we sought but which weren't offered. I don't want to see British companies prevented from trading with the rest of the EU, for example, with punitive tax rules. I'm still pro-Europe as a free-market trading group.

Alsp... am I the only one that like these macho all-night sessions? Having never made a good decision myself when bleary-eyed at 3am, I can't see how EU leaders function any differently.

scary and others, we ALSO export to them. No, of course they are not going to stop exporting to us, or embargo our goods, but they could create all kinds of disincentives for their own companies to trade with us or use our financial services. Not intentionally, even, but remember what happened to the cotton industry in the southern states during the American civil war? Jeff Davis 'grew a pair' and cut the Manchester mills' supplies. What was the result? The Indian cotton industry.

What benefits do you all envisage from Dave's pair growth? It isn't going to involve any immediate cut in the EU subsidy. The ONLY beneficiaries are liable to be people like the broker you cite.

bob, thanks so much - I now see how to conduct a debate properly. I throw in the phrase 'grown a pair' because this adds depth and maturity, as well as elucidating complex economic issues. I'm sure it's mere coincidence that it's been used by some many DM readers this morning.

seiglinde, I guess that just indicates that you read the DM. I don't.

Well on balance I say DC made the right decision.

There are plenty of people who said we should have joined the Euro initially and that we'd be left behind, be isolated etc. Now with the benefit of hindsight, it appears we were right to not join.

I don't like the idea that the Eurozone is failing because of the structural weaknesses and the answer the powers that be have come up with is more Europe.

Time & time again it seems that France/Germany tolerate the UK rather than treat us like equals. Maybe this is because they see us as a bit awkward because we fundamentally do not want a United Federation of Europe and it just seems this is where we are going.

I used to be very pro-Europe but as time goes on, I really do think we need to reevaluate what WE want and the direction Europe seems to be moving in then decide if we want to remain.

I know some people will want to bash the Tories because they'll see this as protecting the bankers. But let's face it, if Europe proposed a tax 80% of which would be paid by say....French farmers, Sarkozy would be the first to say "NON!"

I want a financial transaction tax.

I do too Hully but one which is global. Not one which makes us uncompetitive with the rest of the world.

As much as I think the Tories are a bunch of overprivilidged (insert the usual ranting quote here ) wankers, I agree with niceguy2.

I'm not happy about using the tired old "we must protect the city" as an excuse. Deep and cutting reform is needed there more than anywhere else in the UK (note Landlsey, more than the NHS) but staying out of the Euro was the best thing the UK ever did.

For a start, there are quite a few taxes in place anyway, and it would be an absolute nightmare, collecting the tax, monitoring for the payment of tax and you can kiss goodbye free bank accounts. For e.g., the institution where I work there are approximately 5mn transactions a DAY (that's one institution). That could cover transactions in and with EU counterparties, as well as US, Middle Eastern, South African, Asian etc. How the hell would you monitor who/where/what is paying? That's one institution. Retail banking is a billion times worse.
There are countries were you are charged for withdrawals/payments etc. (south africa and Australia for e.g.) and it is awful.

also, what financial transactions? You transfer money between your accounts - that would be a financial transaction. Want to be taxed on it? Would it actually be of any benefit?

Oh details, Abs, details. I concern myself not with those, they are for the wonks. I just want the City to stop fucking with our lives and pay some money.

They do. Billions and billions and billions of pounds in tax. The average City worker (lawyers, bankers, accountants) contributes something like £37,000 in tax every year. Obviously that's averaged over everyone.

I had to laugh (and almost cry) when Darling was whinging about Goldman Sachs paying bonuses, going on about how they shouldn't, they'd been bailed out. But:

• they'd had assistance from TARP, which was a US scheme. Not UK
• they'd paid back their TARP loans
• if you have those earnings at profits, it's taxed at c. 18%. If it's paid out as bonuses, the IC tax paid on it is generally around 40% + NI contributions.

So basically, he was whinging that a foreign organisation was going to be paying more tax to HMRC. I mean, I have a rather basic understanding of tax (I did a couple of modules at law school), but it would appear I have a better understanding than the former chancellor ...

A lot of the "the City's PURE EVIL" is coming from the government, and you have to wonder why they're so keen to allocate blame ...

I read the Daily Mail and have yet to come across the term 'grow a pair' in their erudite articles on the matter.

(I'm for certain not paying 37k, but sometimes it feels like it)

Taken as a whole (including PIIGS), the Eurozone is in good shape. Much better shape than Britain and the USA.

But can they fiscally unite?

Cameron is out of his depth and has made a massive error.

We need growth and this means sustainable trade and investment. The key player in this is Europe.

Or are we to somehow 'grow' by folding inwards? I don't think so. Thatcher fucked up over Europe and gave us a legacy of reduced production.

Absof I'm so glad someone pointed that out. The fact is this country can not afford for bankers not to be paid so much!! How much tax do people think those salaries and bonuses contribute to the UK coffers. Some people are just so naive.

But I think this is a huge power shift towards the other Euro states and do wonder what the longterm impact on the UK will be, including on the financial services industry. I doubt it will be plain sailing for the City over the longterm.

But Abs, you surely can't deny that the unregulated City is causing havoc across the world with hedge funds, shorting, sub-priming etc etc?

It is regulated. Some areas are ridiculously well regulated (the area I work in, in all honesty, the UK is the best in the world at it. The US sucks). Part of the problem (and again, you won't hear this coming from the government) is how badly the FSA messed up and how they've practically been catatonic for the last ten years. I had some dealings with them recently, and honestly - they're rubbish. They're getting a bit perkier, but nowhere near what they should be doing.

Also, if you want an area to have more regulation - it's hedge funds. A lot of the more recent problems, the instability in the markets, originated with hedge funds. They're not regulated at ALL in some places (most of the US regulators didn't touch them until recently, just assmed "they don't have retail clients, don't bother"), likewise cayman islands which is a huge centre for hedge funds.

I also think most people don't have much of an idea of what the City actually does. There's so much that goes on, even away from standard finance stuff. For one thing we were discussing at work (Mugabe related) my colleague said "you know, nobody actually ever discusses all the good stuff we do, it's only when people mess up"