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25/08/2016

Merkel warns against gains for British banks under ‘Brexit’ deal

Euro & Finance

Merkel warns against gains for British banks under ‘Brexit’ deal

David Cameron, with Angela Merkel

[Number10gov/Flickr]

German Chancellor Angela Merkel wants a fair deal to help keep Britain in the European Union that avoids giving Britain’s financial sector an advantage over the eurozone through lighter regulation, deputies from her party said on Tuesday (16 February).

Merkel told a meeting of her conservative Christian Democratic parliamentary group on Tuesday that she hoped EU leaders could reach an agreement with Britain at a summit on Thursday and Friday. “There can’t be a situation where the British financial sector is less regulated than the eurozone,” one deputy reported Merkel as telling the meeting.

Reflecting her concerns, France wants guarantees that wording intended to ensure the City of London does not suffer from deals cut within the eurozone does not then allow British banks a chance to benefit from lighter local regulatory constraints.

France refuses to unpick banking union to appease Cameron

Despite a marathon day of negotiations in Paris, David Cameron and François Hollande were unable to agree on the EU’s future economic governance. EurActiv France reports.

EurActiv.com

Merkel’s clear aim was to keep Britain in the EU but she also wanted to avoid London preventing a deeper integration of the eurozone, the deputies said.

British Prime Minister David Cameron fended off changes on Tuesday to a draft deal he has cut to help keep Britain in the EU, as other states demanded adjustments and the European
Parliament said it could not guarantee to pass the reforms.

Two days before a summit where all sides hope for agreement, wrangling continued behind the scenes over the wording of the deal. Cameron made no public comment during a visit to Brussels and one person who met him said he appeared “very stressed”.

Background

British Prime Minister David Cameron promised to renegotiate the UK's relations with the European Union. The renegotiation will be followed by a referendum by the end of 2017, to decide whether or not the United Kingdom should remain in the EU.

If he achieves the reforms, Cameron will campaign to stay in. Otherwise, the Conservatives might campaign to leave the EU. This decision could have far-reaching consequences for trade, investment and Great Britain's position on the international scene.

Some other European countries are ready to listen to Cameron's concerns on issues such as immigration, and may be prepared to make limited concessions to keep Britain in the bloc.

But EU leaders also have their red lines, and have ruled out changing fundamental EU principles, such as the free movement of workers, and a ban on discriminating between workers from different EU states.

>> Read our LinksDossier: The UK’s EU referendum: On the path to Brexit?

Timeline

  • 18-19 Feb. 2016: European Council Summit, David Cameron’s demands will be discussed.
  • June 2016: Possible date for UK to organise the referendum.
  • End of 2017: Final date chosen by David Cameron for the organisation of the referendum.
  • July-Dec. 2017: UK holds rotating Presidency of the Council of the EU.