European Liberals say euro pact must focus on fiscal matters

LONDON Mon Jan 9, 2012 9:42pm GMT

Britain's Deputy Prime Minister Nick Clegg (C) speaks alongside European Union Economic and Monetary Affairs Commissioner Olli Rehn (L) and the Prime Minister of the Netherlands Mark Rutte at a meeting of European Liberal Democrats in Government, at Admiralty House, in London January 9, 2012. REUTERS/Luke MacGregor

Britain's Deputy Prime Minister Nick Clegg (C) speaks alongside European Union Economic and Monetary Affairs Commissioner Olli Rehn (L) and the Prime Minister of the Netherlands Mark Rutte at a meeting of European Liberal Democrats in Government, at Admiralty House, in London January 9, 2012.

Credit: Reuters/Luke MacGregor

LONDON (Reuters) - The fiscal pact to fix the euro zone debt crisis should focus on steps needed to secure budgetary discipline and should not divide the wider European Union, European Liberal leaders said after meeting in London on Monday.

Policymakers from Liberal parties around Europe said Britain should remain at the heart of Europe, after Prime Minister David Cameron last month vetoed a new treaty on euro zone fiscal integration, risking isolating London.

By meeting in London, the leaders lent support to their British Liberal Democrat allies - the junior partner in Cameron's coalition government - who fear Britain risks being relegated to the slow lane in a two-speed Europe and excluded from key decisions on the single market.

In a joint statement, they called for the new treaty to be temporary and limited in scope, restricting itself to fiscal matters affecting the 17 euro zone countries.

"We believe that the treaty should over time be folded into the existing treaty," Deputy Prime Minister Nick Clegg, leader of Britain's pro-European Liberal Democrats, told journalists. "We see this as a temporary agreement."

In their statement, the policymakers said the agreement was a step towards greater fiscal coordination, discipline and solidarity among euro zone countries.

"However, we strongly believe that this must not come at the cost of division or disunity in the EU," they said.

Clegg chaired the meeting as part of his drive to "re-engage" Britain with Europe after Cameron's veto.

Dutch Prime Minister Mark Rutte, backing Clegg's campaign, said Britain should not be left in a "secondary position" while other EU members pressed on with a separate treaty.

"From the Netherlands' viewpoint it's very important to secure that, because the UK is growth-oriented," he told journalists at the meeting.

Cameron's decision not to sign up to an EU-wide treaty pleased eurosceptics on the right of his Conservative Party but strained relations with the Lib Dems, junior partner in Britain's 20-month-old coalition government.

Clegg has voiced bitter disappointment at the outcome of the summit, saying it would be bad for Britain's economy if the country were isolated in Europe.

The Liberal leaders met as French President Nicolas Sarkozy said after talks with German Chancellor Angela Merkel in Berlin that Paris and Berlin wanted EU states to wrap up negotiations on a planned new treaty in the days ahead so it could be signed on March 1.

Danish Economy Minister Margrethe Vestager told reporters in London that Europe was at a crossroads, economically because of the sovereign debt crisis but also politically. "I think it's very important for all of us that we have a Europe of 27," she said.

Cameron has opened a potential new battleground with his European partners by vowing to veto a financial transaction tax backed by France and Germany.

(Additional reporting by Sven Egenter, Drazen Jorgic)

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