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?

Have to say I am extremely sceptical about the supposed veto that Cameron is saying he wil use.

In reality, he is talking tough only to appease his backbenchers. He wil not in the end do anything to stop EU treaty changes. Read between the lines of what he has said. He has said he will protect the City and that the UK wil not join the Euro. In reality, he will do what the City and big business wants, not what we voters may want.

What that means is he will not agree to a Tobin tax. That is fine. It is an economically silly idea anyway. However, we are not in the Euro and never were going to be so that promise is neither here nor there. What the City really wants is to make sure European sovereign Govts do not default on their debts and the Euro and EU do not fall apart in a chaotic mess. To deliver that David Cameron wil agree to a treaty change as long as we get an opt out of certain small bits of it.

The City and big business definitely does not want a referendum on EU membership and it is clear David Cameron has and will do everything to avoid one. I want a referendum though and as do many of his backbenchers. It is only when the voters of Europe get to vote to kick out their Govts that the whoel mess wil really be sorted out. Our current Govt and that of many other EU nations are at odds with their people. The politicians are doing what bankers want - not giving their people the right to say we wil not be debt slaves living in austerity for years just so bankers can get bailed out and get paid their bonuses.

Well I've always been pro europe but anti euro,anyone with even a modicum of european history could have foreseen that any form of financial european union was bound to fail,you can't have economic union without political union as has been amply demonstrated.If the decision makers are responsible to their domestic electorate they are always going to make the best decision for their domestic situation not for the union as a whole.Look at Merkel she knows that the German public will only accept a bail out responsibility for Germany if she convinces them that there is no chance of this happening again(of course in reality it is impossible to guarantee this)otherwise she will be hung drawn and quartered ,the german press are already pretty anti.

No skin off my nose if you believe it, HullyGully. I'm only trying to demonstrate that a little bit of scepticism may be useful.

You.Haven't.Read.It.

And btw, what has belief got to do with it? I said it was interesting and that I would value Abs' opinion as she works thusly.

Agree with MoreBeta

'In reality, he will do what the City and big business wants, not what we voters may want.'

I think the City is far more important in this decision that any Eurosceptic backbenchers.

"Have to say I am extremely sceptical about the supposed veto that Cameron is saying he wil use.

In reality, he is talking tough only to appease his backbenchers. He wil not in the end do anything to stop EU treaty changes. Read between the lines of what he has said. He has said he will protect the City and that the UK wil not join the Euro. In reality, he will do what the City and big business wants, not what we voters may want."

This is exactly what I thought he had said, was wondering reading this thread if something more had been said/done? I am struggling to find info as to anything more serious having been said?

'And btw, what has belief got to do with it?'

OK, so it is just funny?
The causes are serious and I don't think they have anything to do with 'national characteristics', but we all have differing opinions.

I actually think that DC is far more Europhile than he is made out to be and he certainly didn't use the veto lightly or to pander to Tory Eurosceptics. As I understand it, Britain would have agree to this new treaty on the understanding that certain regulations (namely in the financial sector) didn't apply to us. But Sarko and Merkel gave absolutely nothing so DC had little choice but to use the veto.

I'm fairly gloomy as to where it will all end - possibly the break up of the Union, probably the end of the Euro. But then a system that is vastly more bureaucratic than democratic is bound to fail really. And a system that frowns on member states allowing their electorate to have a say on (for eg) the Lisbon Treaty is one which perhaps is better failing, or at least having its wings severely clipped. It will be a rough ride whatever happens.

The really interesting question is what pressure willl the EU core put on the City in the future? What is it that Cameron did not want to agree to? Is it only about a transaction tax or are there other things involved too?

'I actually think that DC is far more Europhile than he is made out to be and he certainly didn't use the veto lightly or to pander to Tory Eurosceptics.'

Agree, Callisto. I am sure tha the City was the major concern.

I don't think it will be teh end of the Union. This makes the core much, much stroinger and has implications for us and the City.

If you listen to the City analysts, they keep talking about the ECB needing to print more money, but Germany doesn't want to do that because it fears inflation.

The City has become far too powerful in its sway over the UK Govt decision making process and especially economic policy and now our foreign policy with regard to our relationship with Europe.

This is a classic examole of the 'Dutch Disease'. Everything has become skewed towards the City. Not only do house prices in London get stretched beyond the limit of what anyone outside financial services can afford but our best and brightest talent gets sucked into working in the City, our monetary policy (ie interest rates) are being set to support the banking system, tax payers money is being used to recapitalise banks. Politicians even aspire to jobs in the City after they leave office.

It has become the only thing that matters. That is bad for our country. I say this as someone who used to work there as did DW.

I read an article about Iceland and their [President said it was amazing once they let their huge banking sector go bust the economy started to heal. Young talented people that would have gone into banking went and worked for new types of firms in other industries, some started their own firms. The Icelandic economy is a lot more diverse and a lot stronger in some ways. The supposed riches that the huge banking sector brought to Iceland almost destroyed the country.

I don't think that Germany is doing what the City wants. Who will be the winner?

Will the markets get their way or will the politicians be able to curb the markets?

In the meantime, lots of money will be printed and lost, and the economy will suffer.

Nigel Farage was just on the news, and I think he is right. He says that the City is now vulnerable. We are on the outside and the other states may in the future make all sorts of rules that regulate the market, and we will not have much influence to stop them.

Expect the City to roar and more financial turmoil.

'In reality, he will do what the City and big business wants, not what we voters may want.'

And mirrored in the eurozone in that the ecb is encourange further ingtegration becore if considers lending to govts.

So all eu countries are being held to account by something or another.

I personally not a european fan I think of it as a mass of tinty inward looking, rather nasty, provincial, right wing countries. The UK has the capacity to be wider ranging. However, I also think it's dangerous to be left out of this club.

The UK is in a horrible situation, but so is Germany, France, Italy etc. Does the UK have anything positive to offer the rest of its partners?

Oh, my typing is really bloody spot on today!

Well, part of what Germany wants is to defuse the power of London as a financial centre - the second European financial centre is Frankfurt, and it seriously pisses Germany off. With the new European "super" regulators they've insisted that one be based in Paris, and one be based in FFT (can't remember exactly which is where) and the minor one be based in London, in an attempt to draw business away from the UK. IIRC, the Euro-wide Securities regulator will be/is based in FFT now, which is barking considering that the LSE is the largest securities market in the world.

Agree with claig re germany and inflation - but italy might think otherwise in its situation. Now the EU is trying to draw them closer together?

I am not speaking from a particularly informed opinion, but this situation leaves me feeling very nervous, for these reasons:

• The sovereign debt crisis has not been solved by the decision last night to go with an accord of 17, plus however many others decide to join. We still do not know if Germany will underwrite the debts of the other Eurozone countries. Therefore the euro is still at risk.
• The proposed financial transaction tax seems to me to massively anti-competitive, unless it could be implemented globally, which of course it can not. If it goes ahead the City, and by extension, the UK will suffer (please spare me any over-simplistic Bash the Bankers tirade: I do not work in the City but I can't bear the ill-informed reflex reactions that I read everywhere that blame a system that they patently don't understand. I don't claim to understand it either, but at least I acknowledge that it's complex).
• If this accord does what it is intended to do and the euro survives, the UK may well find itself in a European minority of one. It is not hard to extrapolate out to a point where Britain becomes the comparatively tiny neighbour to the European behemoth, which, naturally, will become the preferential trading partner of other major global economies, and which will protect its own interests. I think the current accord represents a threat to Britain's ability to trade within Europe and ultimately globally.
• I don't feel comfortable being excluded from future negotiations. My instinct is that it is better to be in the room than not. The veto could have been exercised at any time - why now when the negotiations are still going on? We have burned all bridges with Merkozy and more largely with the Eurozone. It's all very well to be pleased not to be in the Euro today, but we have excluded ourselves from helping to decide whatever happens next.

There's much to say on this. I'm genuinely interested in how it unfolds, and our different opinions as it does. It would be a shame if this discussion (here, but also more widely) descended into bickering. Would that our European leaders could refrain.

I noticed that DC looked faintly abashed, foolish even, coming out.

(he was openly snubbed by Sarkozy.)

He made a bad call I think. And he knows it.

"The proposed financial transaction tax seems to me to massively anti-competitive, unless it could be implemented globally, which of course it can not."

Ask the Americans how quickly financial centres can shift. Inarguably, before Sarbanes Oxley, the NYSE was the most prominent stock exchange in the world. It shifted so quickly, within a few months, to London after SOX was introduced and the NYSE became less attractive. Hong Kong and Singapore are very attractive for business, and have a lot going for them that London currently has - good legal infrastructure (surety and enforceability of contract is very important), well developed banking system and stock exchanges

Abs - precisely.

Meanwhile, as an aside, I'd like to see an independent breakdown of the potential impact on the Uk of a disorderly euro break-up. We keep hearing it could be disastrous, but surely some economic consultancy has tried to quantify this? Can anyone point me in the right direction?

Chandon - Sarkoxy faces re-election next year. He needs to be able to show he 'saved the euro' before then, to avoid campaigning during a crisis opposite a Socialist opponent. France's debt puts it next in the firing line after Italy and Spain, and as the second-biggest Eurozone economy they have the most of any country struggling in the the bond markets to lose. Sarkozy therefore needs a quick result, and to come out of these negotiations smelling of roses. In other words, for Sarkozy, taking a few pot-shots at Cameron is a/easy and b/necessary.