Government fights off EU powers that could summon George Osborne to Brussels
The government is fighting off new powers for the EU to summon George Osborne, the Chancellor, in front of the European Parliament to justify and defend Britain's economic policy.
6:34PM BST 14 Jun 2011
Mark Hoban, a Treasury minister, represented Britain at a dinner of European finance ministers on Tuesday night to discuss new EU"economic governance" rules aimed at preventing a future Greek-style euro zone debt crisis.
Under a new "pact" all EU countries including Britain will accept increased Brussels "surveillance" and regular "monitoring" recommendations on their economic and budgetary policies.
While Britain will not be subject to the same EU sanctions or fines to enforce the new rules as eurozone members, British Treasury ministers do face a summons to explain their policies to MEPs. Britain is opposed to the proposal.
"The government would not accept any proposal for the European Parliament to be able to summon ministers to appear before it," said a spokesman.
"We are clear that democratic accountability is very important, however this is why we have national parliamentary scrutiny procedures, which the European Parliament must not eclipse."
But before the new EU economic pact can be signed by member states it must be also be agreed with MEPs who have made the issue a condition of a deal.
"It might be a red line for Britain but it is also one for MEPs and a deal must be done quickly before a summit on 24 June. Something will have to give and negotiations are very delicate," said a Brussels diplomat.
The European Parliament is particularly insistent that governments should have to come to Brussels to publicly justify any departure or deviation from EU guidance on how best to manage their national policies.
Under draft rules, Mr Osborne could be compelled to appear before the EU assembly's monetary affairs committee to explain himself in an "economic dialogue" with MEPs.
Bill Cash, the chairman of the House of Commons scrutiny committee, warned that MPs would insist that British ministers were only answerable to them and the public.
"We have absolutely no business complying with any demand of the European Parliament. They have no status whatsoever," he said.
"It would be humiliating and degrading for any British Treasury ministers to be exposed to this demand."
Meeting of eurozone finance ministers fails to solve disagreement over second Greek bailout;
The FT reports that, under the German proposal, any new bailout package for Greece would need to include €20bn in financing to recapitalise Greek banks according to a leaked European Commission document. On the total size of the Greek bailout Spanish news agency EFE quotes Belgian Finance Minister Didier Reynders saying: “We’re talking about a new intervention of €80bn coming from the IMF, the EU and the eurozone.” The article suggests that a further €25bn is expected to be provided via the extension of Greek debt held by private investors, making up a total rescue package of €105bn. Writing in Suddeutsche Zeitung, Bundesbank President Jens Weidmann suggests that the ECB would not take part in any debt rollover and will seek to reduce its exposure to Greek debt as quickly as possible.
During an interview with the European Parliament yesterday, Mario Draghi, President of the Italian Central Bank, confirmed that if the ECB does face losses from the Greek crisis “the national banks will need to pay according to their capital key”, as Open Europe suggested in its recent report on the ECB’s exposure to the Greece and other peripheral EU economies. Open Europe’s finding that the ECB has an exposure of €444bn to the eurozone’s peripheral economies is quoted by Italian financial daily Il Sole 24 Ore.
Meanwhile, the Greek government confirmed yesterday that it has missed its deficit target for the first five months of this year. Its deficit totalled €10.28bn, compared with its target of €9.07bn. The Greek government’s majority has dropped to just four seats in Parliament, with more MPs defecting and pledging to vote against the new austerity plan, increasing doubts over whether it will pass through parliament. There will be a general strike in Greece today which is expected to grind the country to a halt.
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