European Debt Crisis

PM Cameron’s decision could hurt U.K. in the long run

Stephen Beard Dec 12, 2011

Jeremy Hobson: French President Nicholas Sarkozy told Le Monde newspaper this morning that the legal details of Friday’s euro summit deal will be coming in the next 15 days. The deal aims to keep the euro together by allowing a central authority to enforce budget rules for individual countries. In the U.K. today, British Prime Minister David Cameron will explain to his parliament why he didn’t support the deal.

Marketplace’s Stephen Beard is with us now live from London with more on all of this. Good morning, Stephen.

Stephen Beard: Hello Jeremy.

Hobson: Well first of all, you’ve had the weekend to digest this deal across Europe — is there a sense this morning that the crisis is on the way to a close?

Beard: No, I think nobody believes the crisis has been solved. The new treaty won’t be ready until March, and the big question is: will it any way be enough to encourage the European Central Bank to intervene much more aggressively in the markets to prop up Italian and Spanish government bonds. No sign of that yet.

Hobson: And Stephen, what about this split, with the U.K. deciding not to sign up for this new deal. What does that say about the U.K.’s relationship with its European neighbors?

Beard: They’re at their lowest ebb since the U.K. joined the community forty years ago — Britain’s very unpopular with its partners. Angela Merkel of Germany said Prime Minister Cameron just wasn’t negotiating.

Cameron’s veto is generally popular in Britain, where it is sort of widely seen as standing up to those “continental bullies.” But Cameron has trouble within his own government, with the party he shares power with — the Liberal Democrats. They are very pro-European.

Nick Clegg, the leader of the Lib Dems — who’s the deputy prime minister — should be standing shoulder-to-shoulder with Cameron. He said the summit result was bad for Britain.

Nick Clegg: I think there is now a real danger that over time, the United Kingdom will be isolated and marginalized within the European Union. I don’t think that’s good for jobs and I don’t think it’s good for growth.

The European Union accounts for 50 percent of British exports, and 3 million British jobs depend on that trade, so British relations with the EU are pretty crucial.

Hobson: Marketplace’s Stephen Beard in London.

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