Europe could agree to broad changes to existing legislation within a year or two that would pave the way for greater fiscal integration of members of the euro zone, British finance minister George Osborne said yesterday (13 September).
But he stressed that Britain would insist on protecting its interests in any new treaty, and that he did not want decisions on European policy to be dominated by a closed shop of eurozone members.
Osborne has long argued that members of the single currency should pursue the "remorseless logic" of monetary union with fiscal union.
His interest is in shoring up Britain's major trading markets, not in having any closer involvement in the bloc itself. If anything, London is becoming more disengaged.
Foreign Secretary William Hague said on Saturday he would like to repatriate more powers from the European Union but that the presence of the centrist Liberal Democrats in Britain's coalition government had thwarted him.
"It's an area we've had to compromise on in return for other compromises," Hague told the Times newspaper.
European leaders have already pledged to enshrine in law the future European Stability Mechanism bailout programme for highly-indebted countries, and Osborne said broader changes to European legislation, though not imminent, would not be a long time coming.
"We're not going to get a new European treaty this autumn, because if there were to be a big treaty change, this would have to be ratified by 27 national parliaments and that would take time," he told reporters on the sidelines of a meeting of finance ministers of the world's seven leading industrialised nations.
"I think it is on the cards, that there may be a treaty change imposed in the next year or two, beyond what has already been proposed in terms of a small change to put the ESM on to a treaty basis."
German Chancellor Angela Merkel said on Friday that the European Union must enact treaty changes in order to strengthen cooperation during the debt crisis.
The EU is already discussing toughening up sanctions on eurozone states that breach its budget rules, in an effort to help restore market confidence in eurozone public finances and prevent another sovereign debt crisis.
Osborne said it was an "absolute requirement" that any EU-wide treaty would safeguard Britain's interests in key areas.
"It is crucial that Britain's interests on financial services, on the single market, on competition are protected, that we're not outvoted by the euro zone, that there is not an in-built eurozone caucus into the system […] that we are able to continue to have a decisive say on things that affect us."
Asked about opting out of other parts of the EU, Hague said: "It's true of the euro, it could be true of more areas in future. In fact we may get ahead as a result of being outside."
EURACTIV with Reuters