Deal or No Deal?
Last week’s summit was heralded as one of the most important in the history of the European Union. EU leaders were keen to agree to a deal which would help them to avoid a repeat of the 2007-8 debt crisis. The 17 members of the eurozone, along with six other countries have signed up to a eurozone pact – an inter-governmental agreement as opposed to an EU-wide treaty. The UK has decided to block efforts to make the deal binding on all 27 member states.
23 out of 27 have signed the new ‘fiscal compact’ and it seems that the remaining three member states will join, once their parliaments have approved the deal.
The deal is designed to bring a greater level of fiscal union to the EU, with closer budgetary co-ordination between the member states. The head of the European Central Bank, Mario Draghi, has suggested that this will bring more discipline in economic policy.
Many have questioned why the UK has chosen not to sign up to this deal. The UK’s Prime Minister David Cameron was wary about the the increased financial services regulation that would affect the City and wanted to protect the UK’s financial services industry. His decision has created rifts not only with and within the EU, but also between the Conservative party and the Liberal Democrats, their coalition partners.