:00:13. > :00:18.Did he jump, or was he pushed? Afraid I cannot do that. It's not
:00:18. > :00:22.in our national interests. I don't want to put that in front of my
:00:22. > :00:26.Parliament because I don't think I could recommend it with a clear
:00:27. > :00:30.conscience, so I am going to say now and exercise the veto. That is
:00:30. > :00:33.effectively what I did. David Cameron says he's made the right
:00:33. > :00:40.choice for Britain, but was it a choice made for him by European
:00:40. > :00:43.leaders? Did he walk away with anything? Well, he certainly
:00:43. > :00:48.enhanced his reputation as a defender of the national interests.
:00:48. > :00:52.Alas, for Britain, this summit was meant to be about coming together
:00:52. > :00:56.decisively to act in the common good. We'll be asking the Europe
:00:56. > :01:02.Minister whether his leader has put Britain on a path out of the EU.
:01:02. > :01:06.And there is that small matter of the crisis that started all of this.
:01:07. > :01:11.Paul Mason is here. The new EU budget rules make spending your way
:01:11. > :01:14.out of recession illegal. So where is Europe's growth going to come
:01:14. > :01:20.from? We assess whether this summit has done anything to take the euro
:01:20. > :01:25.out of the danger zone. And what the past 24 hours has done to
:01:25. > :01:35.British politics - thrilled Tory backbenchers, nervous Liberal
:01:35. > :01:35.
:01:35. > :01:40.Democrats - how easily now can they Good evening. Or is it "auf
:01:40. > :01:44.wiedersehn, England". So read the banner headline in one German
:01:44. > :01:47.magazine today. 26 members of the European Union are going to
:01:47. > :01:52.negotiate a new treaty to help make the single currency work. Britain
:01:52. > :01:54.is not. David Cameron said he had to veto a treaty of the 27 because
:01:54. > :01:56.the others wouldn't give special protections to our financial
:01:56. > :02:03.services industry. Eurosceptics are thrilled, and Liberal Democrat
:02:03. > :02:06.Ministers are trying not to look too glum. But you might say it's a
:02:06. > :02:09.strange kind of veto that doesn't prevent the thing that the
:02:09. > :02:12.Government wanted to stop and doesn't win the city any more
:02:12. > :02:21.protection from Brussels than it already has. Our diplomatic editor
:02:21. > :02:25.Mark Urban was there. Mark, what did happen? Well, it was
:02:25. > :02:29.always going to be complicated. If David Cameron had gone along with
:02:30. > :02:33.what the others wanted, then there would have been this process of
:02:33. > :02:36.treaty change, triggering all sorts of legislative and political steps
:02:36. > :02:40.in the member countries, but because he didn't want to go along
:02:41. > :02:44.with it, and that process, by the way, would have taken months -
:02:44. > :02:47.people say until March - to produce the sort of effects that we're
:02:47. > :02:53.looking at, so it was never going to be a quick-fix, but because
:02:53. > :02:56.David Cameron said no and did use his veto - a pretty major moment in
:02:56. > :03:03.European history - they can now blame him for things that go wrong
:03:03. > :03:07.subsequently. They call this "the family photo", but this clan now
:03:07. > :03:11.has a black sheep. After a night in which Britain had found itself
:03:11. > :03:16.alone on the new package of measures to protect the euro, there
:03:17. > :03:20.was an attempt to make up between Britain's has been itial
:03:20. > :03:24.antagonists, but there was no disguising that the decision to
:03:24. > :03:28.veto EU treaty changes left David Cameron a lonely figure this
:03:28. > :03:33.morning and allowed Nicolas Sarkozy to apportion blame.
:03:33. > :03:37.TRANSLATION: As to your question about our British friends, in order
:03:37. > :03:40.to accept reform of the 27-nation treaty, David Cameron proposed
:03:40. > :03:45.something we all thought was unacceptable. Namely, there would
:03:45. > :03:50.be a treaty written into the protocols that would allow the UK
:03:50. > :03:55.to opt out of rules regarding financial services. Having gone on
:03:55. > :03:59.until 5.00am this morning, some other countries were ready to be
:03:59. > :04:03.even blunter in describing Europe's new alignment. Brit, not Europe -
:04:03. > :04:12.Brits divided, and they are outside of decision making. Europe is
:04:12. > :04:15.united. In the press room, those with various political axes ground
:04:15. > :04:19.them energetically this morning, giving their interpretation of what
:04:19. > :04:23.happened and where it left Britain. David Cameron has been wandering
:04:23. > :04:27.around this building virtually alone. We have had Sarkozy spiting
:04:27. > :04:32.with venom. I fear the City of London will have a very heavy price
:04:32. > :04:38.to pay for this in terms of legislation coming down the road.
:04:38. > :04:44.If Cameron goes back to the United Kingdom if he thinks by vetoing
:04:44. > :04:49.this treaty and appeasing them he has another thing coming. Britain
:04:49. > :04:54.sees this as a definitive placing on the margins of the EU. Is that
:04:54. > :04:58.right? Let's remember that monetary union is only one aspect of what
:04:58. > :05:02.the European Union does. The bulk of decision-making in the EU
:05:02. > :05:06.remains a matter for all 27 member states. Of course, the narrative of
:05:06. > :05:12.Britain's isolation in Europe is such a well-worn one that the press
:05:12. > :05:18.can always be relied upon to lap it up. Thuest tried to combat it in
:05:18. > :05:21.recent weeks by suggesting the UK might be at the head of a group of
:05:22. > :05:25.countries outside the EU that shared similar views, but last
:05:25. > :05:29.night really gave light to that, and the question now for the coming
:05:29. > :05:34.months is how Britain is going to exert any influence in the
:05:34. > :05:38.discussions that lie ahead? For months, 17 of the eurozone have
:05:38. > :05:45.been central to this crisis, and the ten other members of the EU,
:05:45. > :05:48.peripheral. Last night, six of those others agreed to back the
:05:48. > :05:52.Franco-German plan. Additionally, Hungary, the Czech Republic and
:05:52. > :05:57.Sweden referred it for parliamentary approval. That left
:05:57. > :06:01.only the UK unambiguously opposed. Mr Cameron now cast doubt over
:06:01. > :06:04.whether Europe's institutions, particularly the Commission,
:06:04. > :06:09.effectively its Civil Service, should be allowed to support the
:06:09. > :06:12.other nations moving ahead when one nation objects. The institutions of
:06:12. > :06:16.the European Union belong to the European Union. They belong to the
:06:16. > :06:21.27. They're there to do the things that are set out in the treaties
:06:21. > :06:27.that we've all signed up to over the years, and that is an important
:06:27. > :06:30.protection for Britain. However, those running the EU beg to differ,
:06:30. > :06:35.arguing they can throw their organisational weight behind those
:06:35. > :06:40.countries that have signed up to the fiscal compact. This formula
:06:40. > :06:46.has some handicaps, but we will try to overcome them, and I think we
:06:46. > :06:51.have - we will need a large interpretation of the role of
:06:52. > :06:56.institutions and others, as we did it in the past. Pushing on without
:06:56. > :06:59.changes to Europe's key treaties does, though, threaten a power
:06:59. > :07:02.struggle. The new fiscal compact strengthens the role of the
:07:02. > :07:09.commission, the unelected officials, but what about the other two
:07:09. > :07:13.pillars of the EU, the council, its 27 member governments collectively
:07:13. > :07:17.and the European Parliament? There were already rumblings in Brussels
:07:17. > :07:23.today. This is possible if it is a copy paste of the existing treaty
:07:23. > :07:26.with the same role for the European Commission as today and with the
:07:26. > :07:31.same democratic control by the European Parliament because I
:07:31. > :07:33.cannot accept that we shall have a whole economic governance inside
:07:33. > :07:37.the eurozone and inside the European Union without the
:07:37. > :07:41.democratic control by the European Parliament. So for those processing
:07:41. > :07:45.what everyone apart from Britain agreed, there are many open
:07:45. > :07:50.questions still. This could take months of negotiation and create
:07:50. > :07:54.its own diplomatic gridlock. That's not fast enough for countries that
:07:54. > :07:59.want the underlying sovereign debt problem solved quickly. We have new
:07:59. > :08:06.governments in Italy and Spain. We have signals from both of them that
:08:06. > :08:11.they're doing more to address their - their economies in deep distress.
:08:11. > :08:15.That's the most important step to take. I think that this governance
:08:15. > :08:19.issues are of importance, but it's much more related to the crisis
:08:19. > :08:23.management. Britain's exit from this negotiating process is a
:08:23. > :08:27.gamble. Quite apart from the UK domestic aspect, it's complicated
:08:27. > :08:33.life for the others. They're unlikely to forget that in the
:08:33. > :08:38.eurozone's hour of need, Mr Cameron put national interests first, and
:08:38. > :08:42.they may not forgive him either. That was Mark Urban in Brussels.
:08:42. > :08:46.Before we came on air, I spoke to David Lidington, the Minister for
:08:46. > :08:50.Europe. Minister, what was David Cameron so frightened of last night
:08:50. > :08:56.that he had to take this step? The position he was faced with was that
:08:56. > :09:00.if he accepted a treaty at the level of 27, that would be an
:09:00. > :09:04.amendment to the treaty governing the whole of the European Union,
:09:04. > :09:10.its institutions, the way it does business, and there was a real risk
:09:11. > :09:17.that without the safeguards that he wanted included in that treaty at
:09:17. > :09:21.27, that you would over time have a read-across from the closer fiscal
:09:21. > :09:23.integration that the eurozone countries want to do towards
:09:23. > :09:28.measures that would influence financial services, in particular,
:09:28. > :09:31.but also the single market as they affect Europe at 27. It's such an
:09:31. > :09:35.odd kind of veto because the thing you wanted to stop is going to
:09:35. > :09:40.happen without those safeguards. Aren't you worried about that?
:09:40. > :09:43.Clearly we have to be vigilant, not just on financial services, but on
:09:43. > :09:47.British interests more widely within the European Union. If you
:09:47. > :09:51.look at exactly what happened over the last 12 months, what you've
:09:51. > :09:55.seen is a number of initiatives coming forward where George Osborne
:09:55. > :09:58.and his Treasury team have negotiated very hard, where they've
:09:58. > :10:01.worked with other European countries who have agreed with our
:10:01. > :10:04.views, and they've got a lot of that legislation in a form we have
:10:04. > :10:07.been able to live with. With this decision David Cameron has taken,
:10:07. > :10:10.do you think it's really more likely that that's going to happen
:10:10. > :10:17.in the future or less likely? think that people are going to
:10:17. > :10:22.continue to work on the basis of common interests. They're going
:10:22. > :10:26.ahead with this. They're irritated with what we've done. Realistically,
:10:26. > :10:30.surely there is more chance they're going to go ahead with things the
:10:30. > :10:34.City doesn't like than a few weeks ago when we still might have had a
:10:34. > :10:38.small amount of good will. I think there is an inherent risk in the
:10:38. > :10:43.euro that you could get the growth of rival blocks, and we have to
:10:43. > :10:49.work to avoid that. I have never pretended that risk was absent, but
:10:49. > :10:55.what I think is a mistake is to see that the eurozone or the eurozone
:10:55. > :10:57.plus or the - are all monolithic, cohesive blocks. What you've got
:10:57. > :11:03.are countries, particularly in the eurozone, that have come together
:11:03. > :11:07.for a particular purpose - yes? And we actually want them to succeed
:11:07. > :11:12.in... Yes, that's... If I can finish the point that who on many
:11:12. > :11:16.issues have a huge overlap of interests with the UK, and you talk
:11:16. > :11:25.to a lot of eurozone countries, and they'll say, "We want to continue
:11:25. > :11:29.working with you precisely to see elsewhere". Do you want this to
:11:29. > :11:33.succeed, this treaty with 26 members? To be honest, I never
:11:33. > :11:37.believed that a treaty was going to be the key to solving the problems
:11:37. > :11:40.of the eurozone. I think that the problems of the eurozone - it's
:11:40. > :11:43.certainly in British interests that the eurozone sorts its problems out,
:11:43. > :11:48.but the key to that is first of all dealing with the immediate crisis
:11:48. > :11:52.through working out the details of the Greek debt, the bank
:11:52. > :11:57.recapitalisation and the strengthening of the, f,... If this
:11:57. > :12:02.is an irrelevance, we don't want to help them by allowing them to use
:12:02. > :12:07.European Union resources... It's not an irrelevance when you have a
:12:07. > :12:11.change to the Treaty of Lisbon, which because that treaty governs
:12:11. > :12:18.all the European institutions and the way in which the European Union
:12:18. > :12:22.our vital economic interests. are Europe Minister. You must have
:12:22. > :12:27.some sympathy with your counterparts in Europe who would
:12:27. > :12:32.say, "They're saying they have made a principled decision. This just
:12:32. > :12:36.seems petty." It's not winning any friends at all this move, is it?
:12:36. > :12:39.think what we have to make clear is yes, we'll stand up for British
:12:39. > :12:43.national interests when it comes to a decision, but that we also
:12:43. > :12:46.continue to want the eurozone to work successfully to restore
:12:46. > :12:50.economic stability, and if you listen to - I am sure you did - to
:12:50. > :12:53.what Chancellor Angela Merkel said in her press conference after the
:12:54. > :12:57.summit was concluded, she said that she would be continuing to work
:12:57. > :13:03.with David Cameron and the United Kingdom. And what do you think of
:13:03. > :13:10.Paddy Ashdown saying that this is 40 years of UK diplomacy down the
:13:10. > :13:14.drain? No. I think that is an exaggeration and if I look at what
:13:14. > :13:16.Nick Clegg said and Menzies Campbell said today, you'll see I
:13:16. > :13:20.think that the Liberal Democratic leadership accepts the Prime
:13:20. > :13:24.Minister, given the choice faced him last night had no option but to
:13:24. > :13:28.take the decision he did. Isn't this the start of a road that leads
:13:28. > :13:32.quickly to us leaving the EU? because there are important British
:13:32. > :13:37.interests which I think mean that we are right to remain as members
:13:37. > :13:40.of the European Union. But it's 26 and one - 26 countries who have
:13:40. > :13:44.carried on and got their treaty and everything else and one country
:13:44. > :13:47.outside. You really think that's sustainable? No, because you're
:13:47. > :13:51.looking at a structure under which decisions about did regulation of
:13:51. > :13:54.economic affairs will be taken at the level of 27, in which
:13:55. > :13:59.discussions about foreign and security policy will be continue to
:13:59. > :14:01.be taken at the level of 27, where the United Kingdom is one of the
:14:01. > :14:05.leading European countries. David Lidington, thank you very much.
:14:05. > :14:08.Thank you. We'll have more on the politics of
:14:08. > :14:11.all this in a minute. But now, big bazookas - that's what Paul Mason
:14:11. > :14:15.and I thought we'd be talking about today. David Cameron said the
:14:15. > :14:18.Eurozone needed to come up with one, an overwhelming show of force to
:14:18. > :14:22.set fear into the heart of any hedge fund manager planning to make
:14:22. > :14:25.money from the Euro's demise. But it doesn't seem to have turned out
:14:25. > :14:28.that way. Germany seems to have persuaded the others to make the
:14:28. > :14:30.Eurozone a lot more - well, German. But there's little sign that
:14:30. > :14:40.Chancellor Merkel or the European Central Bank offering to use their
:14:40. > :14:42.
:14:42. > :14:49.big bazookas in return. Paul is Most people in the markets think
:14:49. > :14:52.not, and it will be the market to decide this. Yesterday, with the
:14:52. > :14:57.European Central Bank pumped money into the banking system, making
:14:57. > :14:59.borrowing very easy to do for banks, will work and will stop the banks
:14:59. > :15:03.collapsing in this ever-increasing credit crunch we are seeing in
:15:03. > :15:10.Europe. When it comes to the actual sovereigns, the countries that
:15:10. > :15:14.could go bust, the problem remains. This is a graphic produced by
:15:14. > :15:18.Capital Economics, a London consultancy. Spain and Italy need
:15:18. > :15:21.to borrow about one or trillion over the next few years. They
:15:21. > :15:26.cannot borrow at the moment because people don't want to lend it to
:15:26. > :15:31.them because they fear they might lose it. So it has to come from
:15:31. > :15:38.what we thought would be a bazooka Mark 2. This is what it could look
:15:39. > :15:46.like. The EFSF, the taxpayers' money against which they will
:15:46. > :15:53.borrow some more. That take Shittu around half a trillion. Another
:15:53. > :15:58.half an from B E S M, but they could run in parallel. -- From D.
:15:58. > :16:04.And this is the IMF. That will get some money from Europe and blended
:16:04. > :16:08.back. There is there bazooka. His is big enough. -- that is big
:16:08. > :16:12.enough. A bit at the bottom his country's
:16:12. > :16:16.borrowing. If that should collapse, and Standard & Poor's comes
:16:16. > :16:24.overnight and says she cannot borrow any more at the rates you
:16:24. > :16:29.did, that things collapse. -- then things collapse. People will be
:16:29. > :16:33.downgraded and it will be by to the bazooka.
:16:33. > :16:35.-- goodbye. All of that could be one big
:16:35. > :16:39.question mark, we don't know if any of that could happen.
:16:39. > :16:43.At least we know what that could look like.
:16:43. > :16:48.It is odd, because you say the market has said this is not enough,
:16:48. > :16:56.but they are not happy with it, nor have they tend to today.
:16:56. > :17:01.No. -- nor have they tanked. The small print, it is not that
:17:01. > :17:06.small, they keep it up detailed up- to-date is that in future, eurozone
:17:06. > :17:13.government are not allowed to have a structural deficit over 0.5% of
:17:13. > :17:20.their GDP. A Briton's is currently 4.5 and after bore years of George
:17:20. > :17:24.Osborne's austerity, we will get it down to 2.5 -- after four years. If
:17:24. > :17:30.you are going to impose austerity, where does growth come from? One
:17:30. > :17:34.bond participant was very straight with me on this. I think we need a
:17:35. > :17:38.fiscal union to accommodate a monetary union. But what we have
:17:38. > :17:44.got it looks much more like an austerity Union. We have got limits
:17:44. > :17:47.on deficits, we have got a big push to reduce spending and this reduced
:17:47. > :17:50.government spending looks set to come at the same time as banks
:17:51. > :17:54.tighten up and they reduce private sector spending and that
:17:54. > :17:59.constitutes a double whammy to growth. Thank you very much, Paul.
:17:59. > :18:05.We are going to cast an eye a bit more over the summit and work out
:18:05. > :18:13.whether the euro and the world economy has been saved denied. --
:18:13. > :18:18.saved the tonight. We have that Gertrude Tumpel-Gugerell, a member
:18:18. > :18:25.of the ECB Central Board over the last eight years and they are
:18:25. > :18:31.joined by Mohamed El-Erian. We should start with you, you are the
:18:31. > :18:37.ones with your one trillion dollars and your fund, you could make a or
:18:37. > :18:42.break this, are you piling in or getting out even faster? I don't
:18:42. > :18:46.think we can make it or break it, but our assessment is they took
:18:46. > :18:50.some important steps, but they are not sufficient, so this is neither
:18:50. > :18:56.a quick fix nor is it a comprehensive fix. So we remain on
:18:56. > :19:00.the sideline in terms of engaging in the bond markets of the most
:19:00. > :19:04.vulnerable European economies. is quite a bad result, because we
:19:04. > :19:08.were being told all of these things about 10 days to save the euro,
:19:08. > :19:14.five days to save the euro. This was supposed to bring a step change
:19:14. > :19:20.in the thinking of people like you. Think of it in the following way:
:19:20. > :19:23.everybody recognises that the eurozone building is very fragile.
:19:23. > :19:27.So the eurozone is now building another building and all they have
:19:27. > :19:30.done is laid the foundations. They haven't yet put the different
:19:30. > :19:35.floors on, so people are not going to move from the old building to
:19:35. > :19:38.the new building, they are going to move from the old building out.
:19:38. > :19:42.That is why Europe has to accelerate what it is putting in
:19:43. > :19:46.place. It is not enough to put in a foundation and say we are there to
:19:46. > :19:51.come back in March and build another few flaws. Gertrude Tumpel-
:19:51. > :19:56.Gugerell, you are sitting in the institution, or you used to, that
:19:56. > :20:01.was supposed to be one of the flaws of that institution. We talk about
:20:01. > :20:10.the ECB being the crucial part of the end solution to the euro. Do
:20:10. > :20:15.you think that is going to change? Is the EC began to come in now? --
:20:15. > :20:20.ECB. The European Central Bank has been in different kind of measures
:20:20. > :20:24.to bring Europe out of the crisis, we shouldn't underestimate this. If
:20:24. > :20:27.you look at the results of the summit, there are three major
:20:27. > :20:34.achievements. The first one is a long term it could lead --
:20:35. > :20:44.commitment to sound fiscal Prom -- a long-term commitment to sound the
:20:44. > :20:49.fiscal policies. Blows to help countries Bridge difficult periods.
:20:49. > :20:58.-- loans. And also to support the credibility of these different
:20:58. > :21:01.measures taking... The people, partly because of something that
:21:01. > :21:04.the European Central Bank president said last week, have thought that
:21:04. > :21:08.if there was this kind of commitment to these tough fiscal
:21:08. > :21:18.rules, there would be some sort of reward from the European Central
:21:18. > :21:23.Bank. Are you suggesting that is wrong? The solution can come only
:21:23. > :21:28.from building new confidence in the country's policies, so the solution
:21:28. > :21:31.can come only from the Government themselves. What the European
:21:31. > :21:36.Central Bank has done and has done in the past and can do in the
:21:36. > :21:41.future is first of all provide liquidity. This is the major task
:21:41. > :21:46.of a central bank in such an end -- a situation. The ECB took a step
:21:46. > :21:50.yesterday by deciding to provide three years liquidity and the
:21:50. > :21:57.European Central Bank still has its of government bond purchase
:21:57. > :22:07.programme available. The solution cannot come from the central bank
:22:07. > :22:13.
:22:13. > :22:19.alone. That is something we have had a few times. Cherie Givet Dana,
:22:19. > :22:23.-- Shriti Vadera, does the ECB need to do more? I don't think there is
:22:23. > :22:27.enough there at the moment. What we wanted, and we should stop
:22:27. > :22:31.expecting something in one day, but what we wanted was clarity on an
:22:31. > :22:35.end to destination and a breach of liquidity for sovereign bonds to
:22:35. > :22:40.that the destination. -- Bridge. We half got boat and we haven't got
:22:40. > :22:45.all of it and it is over the next few months that will tell -- we
:22:45. > :22:50.half got both. We will probably have a downgrade as Paul Mason has
:22:50. > :22:54.said over the next few weeks, and that liquidity will be tested. Is
:22:54. > :23:00.the ECB going to step in? And there does need to be a reward, there
:23:00. > :23:04.needs to be a compact on both sides. They could bind the secondary
:23:04. > :23:09.market, but at the moment, they are the only institution in the
:23:09. > :23:18.structure that is able to act. The rest of the money isn't ready.
:23:18. > :23:21.you say to ball boys -- Paul Mason's. That -- point, when all
:23:21. > :23:28.other countries announced a stimulus package in 2009, that
:23:28. > :23:32.wouldn't be possible now? You think that is right? I think it is true
:23:32. > :23:38.that they have produced a toolkit with only one tool, austerity. It
:23:38. > :23:42.is about cuts and deficit caps. Actually, the real problems with
:23:42. > :23:46.the countries in real trouble right now it is the current account, they
:23:46. > :23:49.are not competitive enough. There is nothing that shows these
:23:49. > :23:53.countries will be able to trade their way. They cannot inflate,
:23:53. > :23:59.they cannot depreciate, they cannot borrow cheaply, they don't get
:23:59. > :24:02.money from the ECB. Something has got to give and it could end up
:24:02. > :24:06.with solvency problems and really consigning Europe to 10 years of
:24:06. > :24:11.absolutely no growth. If there is a solvency problem and nobody gives
:24:11. > :24:15.them any funding it, we will be looking at restructure. Mohamed El-
:24:15. > :24:21.Erian, as an Economist, you must worry about where growth is there
:24:21. > :24:25.to come from. It is all fiscal, it is all about tightening budgets.
:24:25. > :24:31.The ECB is saying it doesn't necessarily want to do any more. Do
:24:31. > :24:36.you worry about that? Absolutely. It is one of the five things that I
:24:36. > :24:44.worry about. There is a list to assess summit at the summit. One is
:24:44. > :24:48.Debt, solvency has a numerator and denominator. The denominator is how
:24:48. > :24:51.quickly you grow and generate income. There isn't enough to focus
:24:51. > :24:55.on that. Second, there is no vision for what the eurozone is going to
:24:55. > :25:01.look like in three years' time. Third, the banking system is still
:25:01. > :25:05.Abass. We still have capital inadequacy, asset problems. 4th, we
:25:05. > :25:11.haven't had a clear signal between liquidity problems and solvency
:25:11. > :25:15.problems, and as long as we don't delineate clearly, there will be
:25:15. > :25:20.question marks. And at the big bazooka, which is the ECB, it has
:25:20. > :25:24.and cumin. I sympathise with the ECB, because they have done a lot
:25:24. > :25:29.and have been a bridge to know where. They need to be a bridge
:25:29. > :25:39.there somewhere, but that place is not known. It is a long list and
:25:39. > :25:39.
:25:39. > :25:42.growth is the first item...., briefly, surely De -- surely the
:25:42. > :25:46.ECB doesn't want to be a lender of last resort, but as the crisis
:25:46. > :25:51.continues, it is having to do a lot of emergency support for banks. Are
:25:51. > :25:55.you suffering from the fact that this crisis is not being resolved
:25:55. > :26:00.and there would be enough growth? Growth comes from assessing
:26:00. > :26:06.structural problems and of course, it is a concern. We see the growth
:26:06. > :26:10.prospects for next year are weaker and the aim of the fiscal measures
:26:10. > :26:18.is to limit the structural deficit, which of course takes into
:26:18. > :26:21.account... That hurts growth. Structural reforms had growth. It
:26:21. > :26:25.is reforming labour markets and things in the short term that
:26:26. > :26:30.actually might slow down economies. As we have seen from various
:26:30. > :26:35.countries, I think a number of measures have been taken in the
:26:35. > :26:40.last few years, and if you look at Spain for instance, Spain has tried
:26:40. > :26:45.to address its problems in the labour market. It is in a difficult
:26:45. > :26:47.situation but it is trying to reform the labour market in the
:26:47. > :26:52.direction where it will have more possibilities for employment. The
:26:52. > :26:58.truck -- the same is true for other countries as well. You should take
:26:58. > :27:02.into account the fiscal rule is addressing the structural deficit.
:27:02. > :27:06.The structural deficit takes into account the business... We have to
:27:07. > :27:11.leave it there. Thank you very much to all of you, of I'm Sorry, we
:27:11. > :27:15.have to cut it off. Fog in the Channel, Continent cut
:27:15. > :27:19.off. The old joke isn't as funny today, because it is clear where
:27:19. > :27:25.the rest of Europe wants to go. It is Britain's future that since
:27:25. > :27:29.clouded in doubt and that must include the future of the coalition
:27:29. > :27:33.between Euro-sceptic Conservatives and Europhile Liberal Democrats.
:27:33. > :27:39.Right now, Europe's top duo are apparently so fused in their common
:27:39. > :27:43.purpose they are known as the single name Merkozy. The joke doing
:27:43. > :27:47.the rounds at Westminster is that had David Cameron joined, it
:27:47. > :27:51.wouldn't quite have spelt kamikaze, but politically it could have
:27:51. > :27:54.amounted to quite the same thing. It would have been like the
:27:54. > :27:59.Maastricht Treaty row of seven years ago, except far worse,
:27:59. > :28:03.because he would have had to have brought a bill before parliament to
:28:03. > :28:08.bring the treaty into effect. There would have been MN bends, with Bill
:28:08. > :28:12.Cash and the critics who were around 20 years ago coming back for
:28:12. > :28:16.a second bite -- amendments. There would have been a call for a
:28:16. > :28:21.referendum, even a leadership challenge. The morning after in
:28:21. > :28:25.Brussels was very different. Soft music, warm handshakes, and David
:28:25. > :28:30.Cameron sticking his signature on the dotted line. It is just that
:28:30. > :28:34.this was the paperwork for Croatia to join the EU, not the treaty that
:28:34. > :28:38.most of Europe wanted. This does represent a change in our
:28:38. > :28:44.relationship with Europe, but the court relationship, the single
:28:44. > :28:48.market, trade, investment, that remains as it was and that is very
:28:48. > :28:52.important -- core relationship. In terms of the future and referendums,
:28:52. > :28:56.we will not be presenting a treaty to Parliament. Other countries are
:28:57. > :29:00.going to be signing up to a treaty that has some quite invasive
:29:00. > :29:03.aspects in terms of their sovereignty, their ability to set
:29:03. > :29:07.their own budgets. It will be a matter for them how they deal with
:29:07. > :29:12.their parliament. We will not take a treaty like that two hours.
:29:12. > :29:15.ins and outs of the politics are tricky for David Cameron and are
:29:15. > :29:19.pulling him in two different directions. Liberal Democrats think
:29:19. > :29:23.that Britain should do whatever it takes the stage in the European
:29:23. > :29:27.club, even if that means getting out of the coalition -- to stay.
:29:27. > :29:30.Meanwhile, plenty of Conservative backbenchers think we should use
:29:30. > :29:37.this as a once-in-a-lifetime opportunity to renegotiate better
:29:37. > :29:47.terms, if not entirely out of the EU, definitely closer out than
:29:47. > :29:48.
:29:48. > :29:52.It is nearly 20 years since John Major's Government was brought to
:29:52. > :29:56.the very brink by splits over Europe. One of the leaders of that
:29:56. > :29:59.rebellion was clear - yesterday's veto should only be the start.
:29:59. > :30:05.There are many people who think perhaps we have been proved pretty
:30:05. > :30:08.well on the nail. What I'm saying is this - that there is a necessity
:30:08. > :30:13.to tackle the nature of the European Union as it now is, and I
:30:13. > :30:16.have said repeatedly in a debate yesterday for weeks, if not months
:30:17. > :30:20.and years, that we have to have a fundamental renegotiation of the
:30:20. > :30:25.treaties in our relationship to the European Union. Paul Goodman used
:30:25. > :30:28.to be Conservative MP and now writes for the Tory grassroots
:30:28. > :30:34.website Conservative Home, so he's pretty well tuned in to how
:30:34. > :30:36.Conservative MPs are thinking. There has been a tide of Euro-
:30:36. > :30:40.scepticism flowing through the Conservative Party for the past 25
:30:40. > :30:45.years since Thatcher's Brew speech. What this extraordinary veto has
:30:45. > :30:48.done this amazing event, is it's given that tide another big push,
:30:48. > :30:53.and after this, the question that a lot of Conservative backbenchers
:30:53. > :30:56.will be asking is, well, we've always been told we've got to be in
:30:56. > :31:00.the EU because of our national interests and because we have to be
:31:00. > :31:03.at the heart of Europe. If we're not, we're going to be at the edge,
:31:03. > :31:09.we have to renegotiate a completely new relationship because what's the
:31:09. > :31:12.point of being at the edge but governed by all the rules? While
:31:12. > :31:16.many Conservatives are clearly delighted, this is a very difficult
:31:16. > :31:20.time for Nick Clegg, leader of the Liberal Democrats, a former MEP and
:31:20. > :31:25.pro-European to his core, like much of his party. At the same time, of
:31:25. > :31:28.course, though, he's in coalition with David Cameron. Any Eurosceptic
:31:28. > :31:32.who might be rubbing their hands in glee about the outcome of the
:31:32. > :31:36.summit last night should be careful for what they wish for because,
:31:36. > :31:40.clearly, there is potentially an increased risk of a two-speed
:31:40. > :31:45.Europe in which Britain's position becomes more marginalised, and in
:31:45. > :31:47.the long run, that would be bad for growth and jobs in this country.
:31:47. > :31:51.But other Liberal Democrats are keener to pin the blame on the
:31:51. > :31:57.Prime Minister. I think David Cameron has let us down very, very
:31:57. > :32:01.badly. It's not simply a matter of the written Declarations which end
:32:01. > :32:05.up as treaties of one form or another. It's all about
:32:05. > :32:10.relationships, and what happened at the dinner last night in Brussels
:32:10. > :32:15.was that the 17 countries in the eurozone gathered amongst the 27 of
:32:15. > :32:18.the European Union and said we need help. We need to give the financial
:32:18. > :32:21.markets confidence about the euro that we're united in going forward.
:32:21. > :32:25.We need to make arrangements as quickly as possible, and we needed
:32:25. > :32:29.the help of everyone to do that, and David Cameron effectively said,
:32:29. > :32:33.I'm not prepared to help or to lift a finger. In fact, he went worse
:32:33. > :32:37.than that - he kicked them in the teeth that will not be forgotten.
:32:37. > :32:39.Could Europe then split the coalition? After so many supposedly
:32:39. > :32:44.impossible things have already happened, well, nothing appears
:32:44. > :32:51.completely out of the question. David Grossman. Where does this
:32:51. > :32:56.leave the coalition? With me is the Liberal Democrat Lord Oakshot and
:32:56. > :33:00.the Conservative MP Bernard Jenkin. For you and other Eurosceptics,
:33:00. > :33:04.this is brilliant news, what happened? Can I just make a
:33:04. > :33:07.criticism, which is there is an awful tendency in the BBC to turn
:33:07. > :33:09.this into a narrative about the coalition and about the
:33:09. > :33:14.Conservative Party. This is actually about the substance of an
:33:14. > :33:17.issue, and it's about the substance of an issue of which the
:33:17. > :33:20.Eurosceptic... And how much of this programme have we spent talking
:33:20. > :33:24.about the substance of the issue, and how much have we spent...
:33:24. > :33:27.we had your opening report saying alas for Britain we're isolated.
:33:27. > :33:30.This is interesting. You don't think this is significant for the
:33:30. > :33:33.relationship within the coalition? I do think this is very significant,
:33:33. > :33:38.and I think Matthew is going to think this is very significant. I
:33:38. > :33:41.think everybody should regard this as significant that we are now in a
:33:41. > :33:45.new situation, in a new relationship with our European
:33:45. > :33:49.partners because they are going off and doing something on their own,
:33:49. > :33:53.and we are not involved, but the foundations for that were laid at
:33:53. > :33:57.the Maastricht Treaty, and this moment was always going to become
:33:57. > :34:00.inevitable, and some of us have been saying that for a very long
:34:00. > :34:06.time, and we now must face the consequences of it, and I think
:34:06. > :34:10.David Cameron has now faced the consequences. He's confronted it at
:34:10. > :34:14.Brussels. He said that Eurosceptics shouldn't be celebrating. Can you
:34:14. > :34:19.think of one reason why they shouldn't? They shouldn't be
:34:19. > :34:23.celebrating. Just doing "I told you so?" Bernard Jenkin has been a
:34:23. > :34:27.serial rebel. He, with Iain Duncan Smith, has been leading the
:34:27. > :34:31.opposition effectively of our membership of the European Union.
:34:31. > :34:35.That's not true. He's now saying we told you so. The fact is this is a
:34:36. > :34:40.very damaging day for Europe and for Britain. He says the Europeans
:34:40. > :34:48.have gone off on their own. They haven't. Britain has cut itself off
:34:48. > :34:52.from our main trading partners, our main allies, our main friends. It's
:34:52. > :35:01.deeply dangerous. And millions of jobs, not just in the city, have
:35:01. > :35:06.been put in danger. You say we have given up... What are we giving up?
:35:06. > :35:10.A place at the table with 26 other countries. We have not given up. As
:35:10. > :35:13.David Cameron was explaining, we're still in the 27. The treaty
:35:13. > :35:16.structure is still answerable to the 27 structure as it was before.
:35:16. > :35:20.What has a changed? The only thing that's changed is that the other
:35:20. > :35:24.member states have decided to go off on their own and do something
:35:24. > :35:28.on their own because they cannot conceive of respecting a national
:35:28. > :35:33.interest - a relatively modest demand, I have to say. Many of us
:35:33. > :35:36.would have liked... Excuse me. Excuse me. Are you seriously
:35:36. > :35:40.suggesting that Angela Merkel for Germany and Nicolas Sarkozy for
:35:40. > :35:43.France are not defending their national interests? Of course they
:35:43. > :35:49.are. Don't be ridiculous. So they're saying - the fact is that
:35:49. > :35:55.we - this is the end game of a desperately silly decision by David
:35:55. > :35:59.Cameron when he was trying to buy right-wing votes in a leadership
:35:59. > :36:02.election to lead the mainstream European grouping - he would have
:36:02. > :36:11.been there in Marseilles with the Angela Merkel and Nicolas Sarkozy
:36:11. > :36:19.in Spain, and he's off with the head bangers and wackos in Eastern
:36:19. > :36:24.Europe... If - Prime Minister, would he have been at that dinner?
:36:24. > :36:27.He wouldn't. You're talking rubbish. No, I'm not. You may not have liked
:36:27. > :36:31.it, but Conservative Prime Ministers with a lot more
:36:31. > :36:36.experience, frankly, than David Cameron were there in awhriens the
:36:36. > :36:39.main players on the European right. Now they're completely isolated.
:36:39. > :36:44.Now what really matters is that the British Prime Minister has been
:36:44. > :36:47.doing special pleading for special interests in the City and
:36:47. > :36:54.conciliating people like you who have never accepted the coalition
:36:54. > :36:56.agreement. You're always asking for a referendum which isn't in the
:36:56. > :37:00.agreement instead of putting British interests first. You think
:37:00. > :37:04.this doesn't lead to a renegotiation between British...
:37:04. > :37:10.Put it this way... You seem to be torn about what's happened. Why not
:37:11. > :37:15.openly and honestly say so. I think there needs to be a renegotiation.
:37:15. > :37:19.If we don't get that, that'll be driving us towards the exit. That's
:37:19. > :37:22.why I want a renegotiation, because I want us to remain in the European
:37:22. > :37:29.Union. It's not in the coalition agreement. You're trying to wreck
:37:29. > :37:36.that agreement, which we all signed. The coalition agreement has been
:37:36. > :37:40.overtaken by recent events. It did not. The coalition agreement didn't
:37:40. > :37:44.envision the imminent collapse of the euro. It hasn't collapsed.
:37:44. > :37:48.Despite any lack of help from David Cameron, it hasn't collapsed.
:37:48. > :37:53.They're getting their act together, but without us. From now on are the
:37:53. > :37:58.parties going to get on as badly as you two are? No. We have a deal. We
:37:58. > :38:00.signed up to a deal on Europe which Mr Jenkin and his friends have
:38:00. > :38:04.never accepted. They basically don't trust David Cameron. They
:38:04. > :38:07.think he should have won. He didn't. The fact is a deal is a deal, and
:38:07. > :38:11.all the time you're trying to undermine it, and it's deeply
:38:12. > :38:16.damaging for Britain's position in Europe... I'm sorry. We have to