09/12/2011 Newsnight


09/12/2011

Similar Content

Browse content similar to 09/12/2011. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

Did he jump, or was he pushed? Afraid I cannot do that. It's not

:00:13.:00:18.

in our national interests. I don't want to put that in front of my

:00:18.:00:22.

Parliament because I don't think I could recommend it with a clear

:00:22.:00:26.

conscience, so I am going to say now and exercise the veto. That is

:00:27.:00:30.

effectively what I did. David Cameron says he's made the right

:00:30.:00:33.

choice for Britain, but was it a choice made for him by European

:00:33.:00:40.

leaders? Did he walk away with anything? Well, he certainly

:00:40.:00:43.

enhanced his reputation as a defender of the national interests.

:00:43.:00:48.

Alas, for Britain, this summit was meant to be about coming together

:00:48.:00:52.

decisively to act in the common good. We'll be asking the Europe

:00:52.:00:56.

Minister whether his leader has put Britain on a path out of the EU.

:00:56.:01:02.

And there is that small matter of the crisis that started all of this.

:01:02.:01:06.

Paul Mason is here. The new EU budget rules make spending your way

:01:07.:01:11.

out of recession illegal. So where is Europe's growth going to come

:01:11.:01:14.

from? We assess whether this summit has done anything to take the euro

:01:14.:01:20.

out of the danger zone. And what the past 24 hours has done to

:01:20.:01:25.

British politics - thrilled Tory backbenchers, nervous Liberal

:01:25.:01:35.
:01:35.:01:35.

Democrats - how easily now can they Good evening. Or is it "auf

:01:35.:01:40.

wiedersehn, England". So read the banner headline in one German

:01:40.:01:44.

magazine today. 26 members of the European Union are going to

:01:44.:01:47.

negotiate a new treaty to help make the single currency work. Britain

:01:47.:01:52.

is not. David Cameron said he had to veto a treaty of the 27 because

:01:52.:01:54.

the others wouldn't give special protections to our financial

:01:54.:01:56.

services industry. Eurosceptics are thrilled, and Liberal Democrat

:01:56.:02:03.

Ministers are trying not to look too glum. But you might say it's a

:02:03.:02:06.

strange kind of veto that doesn't prevent the thing that the

:02:06.:02:09.

Government wanted to stop and doesn't win the city any more

:02:09.:02:12.

protection from Brussels than it already has. Our diplomatic editor

:02:12.:02:21.

Mark Urban was there. Mark, what did happen? Well, it was

:02:21.:02:25.

always going to be complicated. If David Cameron had gone along with

:02:25.:02:29.

what the others wanted, then there would have been this process of

:02:30.:02:33.

treaty change, triggering all sorts of legislative and political steps

:02:33.:02:36.

in the member countries, but because he didn't want to go along

:02:36.:02:40.

with it, and that process, by the way, would have taken months -

:02:41.:02:44.

people say until March - to produce the sort of effects that we're

:02:44.:02:47.

looking at, so it was never going to be a quick-fix, but because

:02:47.:02:53.

David Cameron said no and did use his veto - a pretty major moment in

:02:53.:02:56.

European history - they can now blame him for things that go wrong

:02:56.:03:03.

subsequently. They call this "the family photo", but this clan now

:03:03.:03:07.

has a black sheep. After a night in which Britain had found itself

:03:07.:03:11.

alone on the new package of measures to protect the euro, there

:03:11.:03:16.

was an attempt to make up between Britain's has been itial

:03:17.:03:20.

antagonists, but there was no disguising that the decision to

:03:20.:03:24.

veto EU treaty changes left David Cameron a lonely figure this

:03:24.:03:28.

morning and allowed Nicolas Sarkozy to apportion blame.

:03:28.:03:33.

TRANSLATION: As to your question about our British friends, in order

:03:33.:03:37.

to accept reform of the 27-nation treaty, David Cameron proposed

:03:37.:03:40.

something we all thought was unacceptable. Namely, there would

:03:40.:03:45.

be a treaty written into the protocols that would allow the UK

:03:45.:03:50.

to opt out of rules regarding financial services. Having gone on

:03:50.:03:55.

until 5.00am this morning, some other countries were ready to be

:03:55.:03:59.

even blunter in describing Europe's new alignment. Brit, not Europe -

:03:59.:04:03.

Brits divided, and they are outside of decision making. Europe is

:04:03.:04:12.

united. In the press room, those with various political axes ground

:04:12.:04:15.

them energetically this morning, giving their interpretation of what

:04:15.:04:19.

happened and where it left Britain. David Cameron has been wandering

:04:19.:04:23.

around this building virtually alone. We have had Sarkozy spiting

:04:23.:04:27.

with venom. I fear the City of London will have a very heavy price

:04:27.:04:32.

to pay for this in terms of legislation coming down the road.

:04:32.:04:38.

If Cameron goes back to the United Kingdom if he thinks by vetoing

:04:38.:04:44.

this treaty and appeasing them he has another thing coming. Britain

:04:44.:04:49.

sees this as a definitive placing on the margins of the EU. Is that

:04:49.:04:54.

right? Let's remember that monetary union is only one aspect of what

:04:54.:04:58.

the European Union does. The bulk of decision-making in the EU

:04:58.:05:02.

remains a matter for all 27 member states. Of course, the narrative of

:05:02.:05:06.

Britain's isolation in Europe is such a well-worn one that the press

:05:06.:05:12.

can always be relied upon to lap it up. Thuest tried to combat it in

:05:12.:05:18.

recent weeks by suggesting the UK might be at the head of a group of

:05:18.:05:21.

countries outside the EU that shared similar views, but last

:05:22.:05:25.

night really gave light to that, and the question now for the coming

:05:25.:05:29.

months is how Britain is going to exert any influence in the

:05:29.:05:34.

discussions that lie ahead? For months, 17 of the eurozone have

:05:34.:05:38.

been central to this crisis, and the ten other members of the EU,

:05:38.:05:45.

peripheral. Last night, six of those others agreed to back the

:05:45.:05:48.

Franco-German plan. Additionally, Hungary, the Czech Republic and

:05:48.:05:52.

Sweden referred it for parliamentary approval. That left

:05:52.:05:57.

only the UK unambiguously opposed. Mr Cameron now cast doubt over

:05:57.:06:01.

whether Europe's institutions, particularly the Commission,

:06:01.:06:04.

effectively its Civil Service, should be allowed to support the

:06:04.:06:09.

other nations moving ahead when one nation objects. The institutions of

:06:09.:06:12.

the European Union belong to the European Union. They belong to the

:06:12.:06:16.

27. They're there to do the things that are set out in the treaties

:06:16.:06:21.

that we've all signed up to over the years, and that is an important

:06:21.:06:27.

protection for Britain. However, those running the EU beg to differ,

:06:27.:06:30.

arguing they can throw their organisational weight behind those

:06:30.:06:35.

countries that have signed up to the fiscal compact. This formula

:06:35.:06:40.

has some handicaps, but we will try to overcome them, and I think we

:06:40.:06:46.

have - we will need a large interpretation of the role of

:06:46.:06:51.

institutions and others, as we did it in the past. Pushing on without

:06:52.:06:56.

changes to Europe's key treaties does, though, threaten a power

:06:56.:06:59.

struggle. The new fiscal compact strengthens the role of the

:06:59.:07:02.

commission, the unelected officials, but what about the other two

:07:02.:07:09.

pillars of the EU, the council, its 27 member governments collectively

:07:09.:07:13.

and the European Parliament? There were already rumblings in Brussels

:07:13.:07:17.

today. This is possible if it is a copy paste of the existing treaty

:07:17.:07:23.

with the same role for the European Commission as today and with the

:07:23.:07:26.

same democratic control by the European Parliament because I

:07:26.:07:31.

cannot accept that we shall have a whole economic governance inside

:07:31.:07:33.

the eurozone and inside the European Union without the

:07:33.:07:37.

democratic control by the European Parliament. So for those processing

:07:37.:07:41.

what everyone apart from Britain agreed, there are many open

:07:41.:07:45.

questions still. This could take months of negotiation and create

:07:45.:07:50.

its own diplomatic gridlock. That's not fast enough for countries that

:07:50.:07:54.

want the underlying sovereign debt problem solved quickly. We have new

:07:54.:07:59.

governments in Italy and Spain. We have signals from both of them that

:07:59.:08:06.

they're doing more to address their - their economies in deep distress.

:08:06.:08:11.

That's the most important step to take. I think that this governance

:08:11.:08:15.

issues are of importance, but it's much more related to the crisis

:08:15.:08:19.

management. Britain's exit from this negotiating process is a

:08:19.:08:23.

gamble. Quite apart from the UK domestic aspect, it's complicated

:08:23.:08:27.

life for the others. They're unlikely to forget that in the

:08:27.:08:33.

eurozone's hour of need, Mr Cameron put national interests first, and

:08:33.:08:38.

they may not forgive him either. That was Mark Urban in Brussels.

:08:38.:08:42.

Before we came on air, I spoke to David Lidington, the Minister for

:08:42.:08:46.

Europe. Minister, what was David Cameron so frightened of last night

:08:46.:08:50.

that he had to take this step? The position he was faced with was that

:08:50.:08:56.

if he accepted a treaty at the level of 27, that would be an

:08:56.:09:00.

amendment to the treaty governing the whole of the European Union,

:09:00.:09:04.

its institutions, the way it does business, and there was a real risk

:09:04.:09:10.

that without the safeguards that he wanted included in that treaty at

:09:11.:09:17.

27, that you would over time have a read-across from the closer fiscal

:09:17.:09:21.

integration that the eurozone countries want to do towards

:09:21.:09:23.

measures that would influence financial services, in particular,

:09:23.:09:28.

but also the single market as they affect Europe at 27. It's such an

:09:28.:09:31.

odd kind of veto because the thing you wanted to stop is going to

:09:31.:09:35.

happen without those safeguards. Aren't you worried about that?

:09:35.:09:40.

Clearly we have to be vigilant, not just on financial services, but on

:09:40.:09:43.

British interests more widely within the European Union. If you

:09:43.:09:47.

look at exactly what happened over the last 12 months, what you've

:09:47.:09:51.

seen is a number of initiatives coming forward where George Osborne

:09:51.:09:55.

and his Treasury team have negotiated very hard, where they've

:09:55.:09:58.

worked with other European countries who have agreed with our

:09:58.:10:01.

views, and they've got a lot of that legislation in a form we have

:10:01.:10:04.

been able to live with. With this decision David Cameron has taken,

:10:04.:10:07.

do you think it's really more likely that that's going to happen

:10:07.:10:10.

in the future or less likely? think that people are going to

:10:10.:10:17.

continue to work on the basis of common interests. They're going

:10:17.:10:22.

ahead with this. They're irritated with what we've done. Realistically,

:10:22.:10:26.

surely there is more chance they're going to go ahead with things the

:10:26.:10:30.

City doesn't like than a few weeks ago when we still might have had a

:10:30.:10:34.

small amount of good will. I think there is an inherent risk in the

:10:34.:10:38.

euro that you could get the growth of rival blocks, and we have to

:10:38.:10:43.

work to avoid that. I have never pretended that risk was absent, but

:10:43.:10:49.

what I think is a mistake is to see that the eurozone or the eurozone

:10:49.:10:55.

plus or the - are all monolithic, cohesive blocks. What you've got

:10:55.:10:57.

are countries, particularly in the eurozone, that have come together

:10:57.:11:03.

for a particular purpose - yes? And we actually want them to succeed

:11:03.:11:07.

in... Yes, that's... If I can finish the point that who on many

:11:07.:11:12.

issues have a huge overlap of interests with the UK, and you talk

:11:12.:11:16.

to a lot of eurozone countries, and they'll say, "We want to continue

:11:16.:11:25.

working with you precisely to see elsewhere". Do you want this to

:11:25.:11:29.

succeed, this treaty with 26 members? To be honest, I never

:11:29.:11:33.

believed that a treaty was going to be the key to solving the problems

:11:33.:11:37.

of the eurozone. I think that the problems of the eurozone - it's

:11:37.:11:40.

certainly in British interests that the eurozone sorts its problems out,

:11:40.:11:43.

but the key to that is first of all dealing with the immediate crisis

:11:43.:11:48.

through working out the details of the Greek debt, the bank

:11:48.:11:52.

recapitalisation and the strengthening of the, f,... If this

:11:52.:11:57.

is an irrelevance, we don't want to help them by allowing them to use

:11:57.:12:02.

European Union resources... It's not an irrelevance when you have a

:12:02.:12:07.

change to the Treaty of Lisbon, which because that treaty governs

:12:07.:12:11.

all the European institutions and the way in which the European Union

:12:11.:12:18.

our vital economic interests. are Europe Minister. You must have

:12:18.:12:22.

some sympathy with your counterparts in Europe who would

:12:22.:12:27.

say, "They're saying they have made a principled decision. This just

:12:27.:12:32.

seems petty." It's not winning any friends at all this move, is it?

:12:32.:12:36.

think what we have to make clear is yes, we'll stand up for British

:12:36.:12:39.

national interests when it comes to a decision, but that we also

:12:39.:12:43.

continue to want the eurozone to work successfully to restore

:12:43.:12:46.

economic stability, and if you listen to - I am sure you did - to

:12:46.:12:50.

what Chancellor Angela Merkel said in her press conference after the

:12:50.:12:53.

summit was concluded, she said that she would be continuing to work

:12:54.:12:57.

with David Cameron and the United Kingdom. And what do you think of

:12:57.:13:03.

Paddy Ashdown saying that this is 40 years of UK diplomacy down the

:13:03.:13:10.

drain? No. I think that is an exaggeration and if I look at what

:13:10.:13:14.

Nick Clegg said and Menzies Campbell said today, you'll see I

:13:14.:13:16.

think that the Liberal Democratic leadership accepts the Prime

:13:16.:13:20.

Minister, given the choice faced him last night had no option but to

:13:20.:13:24.

take the decision he did. Isn't this the start of a road that leads

:13:24.:13:28.

quickly to us leaving the EU? because there are important British

:13:28.:13:32.

interests which I think mean that we are right to remain as members

:13:32.:13:37.

of the European Union. But it's 26 and one - 26 countries who have

:13:37.:13:40.

carried on and got their treaty and everything else and one country

:13:40.:13:44.

outside. You really think that's sustainable? No, because you're

:13:44.:13:47.

looking at a structure under which decisions about did regulation of

:13:47.:13:51.

economic affairs will be taken at the level of 27, in which

:13:51.:13:54.

discussions about foreign and security policy will be continue to

:13:55.:13:59.

be taken at the level of 27, where the United Kingdom is one of the

:13:59.:14:01.

leading European countries. David Lidington, thank you very much.

:14:01.:14:05.

Thank you. We'll have more on the politics of

:14:05.:14:08.

all this in a minute. But now, big bazookas - that's what Paul Mason

:14:08.:14:11.

and I thought we'd be talking about today. David Cameron said the

:14:11.:14:15.

Eurozone needed to come up with one, an overwhelming show of force to

:14:15.:14:18.

set fear into the heart of any hedge fund manager planning to make

:14:18.:14:22.

money from the Euro's demise. But it doesn't seem to have turned out

:14:22.:14:25.

that way. Germany seems to have persuaded the others to make the

:14:25.:14:28.

Eurozone a lot more - well, German. But there's little sign that

:14:28.:14:30.

Chancellor Merkel or the European Central Bank offering to use their

:14:30.:14:40.
:14:40.:14:42.

big bazookas in return. Paul is Most people in the markets think

:14:42.:14:49.

not, and it will be the market to decide this. Yesterday, with the

:14:49.:14:52.

European Central Bank pumped money into the banking system, making

:14:52.:14:57.

borrowing very easy to do for banks, will work and will stop the banks

:14:57.:14:59.

collapsing in this ever-increasing credit crunch we are seeing in

:14:59.:15:03.

Europe. When it comes to the actual sovereigns, the countries that

:15:03.:15:10.

could go bust, the problem remains. This is a graphic produced by

:15:10.:15:14.

Capital Economics, a London consultancy. Spain and Italy need

:15:14.:15:18.

to borrow about one or trillion over the next few years. They

:15:18.:15:21.

cannot borrow at the moment because people don't want to lend it to

:15:21.:15:26.

them because they fear they might lose it. So it has to come from

:15:26.:15:31.

what we thought would be a bazooka Mark 2. This is what it could look

:15:31.:15:38.

like. The EFSF, the taxpayers' money against which they will

:15:39.:15:46.

borrow some more. That take Shittu around half a trillion. Another

:15:46.:15:53.

half an from B E S M, but they could run in parallel. -- From D.

:15:53.:15:58.

And this is the IMF. That will get some money from Europe and blended

:15:58.:16:04.

back. There is there bazooka. His is big enough. -- that is big

:16:04.:16:08.

enough. A bit at the bottom his country's

:16:08.:16:12.

borrowing. If that should collapse, and Standard & Poor's comes

:16:12.:16:16.

overnight and says she cannot borrow any more at the rates you

:16:16.:16:24.

did, that things collapse. -- then things collapse. People will be

:16:24.:16:29.

downgraded and it will be by to the bazooka.

:16:29.:16:33.

-- goodbye. All of that could be one big

:16:33.:16:35.

question mark, we don't know if any of that could happen.

:16:35.:16:39.

At least we know what that could look like.

:16:39.:16:43.

It is odd, because you say the market has said this is not enough,

:16:43.:16:48.

but they are not happy with it, nor have they tend to today.

:16:48.:16:56.

No. -- nor have they tanked. The small print, it is not that

:16:56.:17:01.

small, they keep it up detailed up- to-date is that in future, eurozone

:17:01.:17:06.

government are not allowed to have a structural deficit over 0.5% of

:17:06.:17:13.

their GDP. A Briton's is currently 4.5 and after bore years of George

:17:13.:17:20.

Osborne's austerity, we will get it down to 2.5 -- after four years. If

:17:20.:17:24.

you are going to impose austerity, where does growth come from? One

:17:24.:17:30.

bond participant was very straight with me on this. I think we need a

:17:30.:17:34.

fiscal union to accommodate a monetary union. But what we have

:17:35.:17:38.

got it looks much more like an austerity Union. We have got limits

:17:38.:17:44.

on deficits, we have got a big push to reduce spending and this reduced

:17:44.:17:47.

government spending looks set to come at the same time as banks

:17:47.:17:50.

tighten up and they reduce private sector spending and that

:17:51.:17:54.

constitutes a double whammy to growth. Thank you very much, Paul.

:17:54.:17:59.

We are going to cast an eye a bit more over the summit and work out

:17:59.:18:05.

whether the euro and the world economy has been saved denied. --

:18:05.:18:13.

saved the tonight. We have that Gertrude Tumpel-Gugerell, a member

:18:13.:18:18.

of the ECB Central Board over the last eight years and they are

:18:18.:18:25.

joined by Mohamed El-Erian. We should start with you, you are the

:18:25.:18:31.

ones with your one trillion dollars and your fund, you could make a or

:18:31.:18:37.

break this, are you piling in or getting out even faster? I don't

:18:37.:18:42.

think we can make it or break it, but our assessment is they took

:18:42.:18:46.

some important steps, but they are not sufficient, so this is neither

:18:46.:18:50.

a quick fix nor is it a comprehensive fix. So we remain on

:18:50.:18:56.

the sideline in terms of engaging in the bond markets of the most

:18:56.:19:00.

vulnerable European economies. is quite a bad result, because we

:19:00.:19:04.

were being told all of these things about 10 days to save the euro,

:19:04.:19:08.

five days to save the euro. This was supposed to bring a step change

:19:08.:19:14.

in the thinking of people like you. Think of it in the following way:

:19:14.:19:20.

everybody recognises that the eurozone building is very fragile.

:19:20.:19:23.

So the eurozone is now building another building and all they have

:19:23.:19:27.

done is laid the foundations. They haven't yet put the different

:19:27.:19:30.

floors on, so people are not going to move from the old building to

:19:30.:19:35.

the new building, they are going to move from the old building out.

:19:35.:19:38.

That is why Europe has to accelerate what it is putting in

:19:38.:19:42.

place. It is not enough to put in a foundation and say we are there to

:19:43.:19:46.

come back in March and build another few flaws. Gertrude Tumpel-

:19:46.:19:51.

Gugerell, you are sitting in the institution, or you used to, that

:19:51.:19:56.

was supposed to be one of the flaws of that institution. We talk about

:19:56.:20:01.

the ECB being the crucial part of the end solution to the euro. Do

:20:01.:20:10.

you think that is going to change? Is the EC began to come in now? --

:20:10.:20:15.

ECB. The European Central Bank has been in different kind of measures

:20:15.:20:20.

to bring Europe out of the crisis, we shouldn't underestimate this. If

:20:20.:20:24.

you look at the results of the summit, there are three major

:20:24.:20:27.

achievements. The first one is a long term it could lead --

:20:27.:20:34.

commitment to sound fiscal Prom -- a long-term commitment to sound the

:20:35.:20:44.

fiscal policies. Blows to help countries Bridge difficult periods.

:20:44.:20:49.

-- loans. And also to support the credibility of these different

:20:49.:20:58.

measures taking... The people, partly because of something that

:20:58.:21:01.

the European Central Bank president said last week, have thought that

:21:01.:21:04.

if there was this kind of commitment to these tough fiscal

:21:04.:21:08.

rules, there would be some sort of reward from the European Central

:21:08.:21:18.

Bank. Are you suggesting that is wrong? The solution can come only

:21:18.:21:23.

from building new confidence in the country's policies, so the solution

:21:23.:21:28.

can come only from the Government themselves. What the European

:21:28.:21:31.

Central Bank has done and has done in the past and can do in the

:21:31.:21:36.

future is first of all provide liquidity. This is the major task

:21:36.:21:41.

of a central bank in such an end -- a situation. The ECB took a step

:21:41.:21:46.

yesterday by deciding to provide three years liquidity and the

:21:46.:21:50.

European Central Bank still has its of government bond purchase

:21:50.:21:57.

programme available. The solution cannot come from the central bank

:21:57.:22:07.
:22:07.:22:13.

alone. That is something we have had a few times. Cherie Givet Dana,

:22:13.:22:19.

-- Shriti Vadera, does the ECB need to do more? I don't think there is

:22:19.:22:23.

enough there at the moment. What we wanted, and we should stop

:22:23.:22:27.

expecting something in one day, but what we wanted was clarity on an

:22:27.:22:31.

end to destination and a breach of liquidity for sovereign bonds to

:22:31.:22:35.

that the destination. -- Bridge. We half got boat and we haven't got

:22:35.:22:40.

all of it and it is over the next few months that will tell -- we

:22:40.:22:45.

half got both. We will probably have a downgrade as Paul Mason has

:22:45.:22:50.

said over the next few weeks, and that liquidity will be tested. Is

:22:50.:22:54.

the ECB going to step in? And there does need to be a reward, there

:22:54.:23:00.

needs to be a compact on both sides. They could bind the secondary

:23:00.:23:04.

market, but at the moment, they are the only institution in the

:23:04.:23:09.

structure that is able to act. The rest of the money isn't ready.

:23:09.:23:18.

you say to ball boys -- Paul Mason's. That -- point, when all

:23:18.:23:21.

other countries announced a stimulus package in 2009, that

:23:21.:23:28.

wouldn't be possible now? You think that is right? I think it is true

:23:28.:23:32.

that they have produced a toolkit with only one tool, austerity. It

:23:32.:23:38.

is about cuts and deficit caps. Actually, the real problems with

:23:38.:23:42.

the countries in real trouble right now it is the current account, they

:23:42.:23:46.

are not competitive enough. There is nothing that shows these

:23:46.:23:49.

countries will be able to trade their way. They cannot inflate,

:23:49.:23:53.

they cannot depreciate, they cannot borrow cheaply, they don't get

:23:53.:23:59.

money from the ECB. Something has got to give and it could end up

:23:59.:24:02.

with solvency problems and really consigning Europe to 10 years of

:24:02.:24:06.

absolutely no growth. If there is a solvency problem and nobody gives

:24:06.:24:11.

them any funding it, we will be looking at restructure. Mohamed El-

:24:11.:24:15.

Erian, as an Economist, you must worry about where growth is there

:24:15.:24:21.

to come from. It is all fiscal, it is all about tightening budgets.

:24:21.:24:25.

The ECB is saying it doesn't necessarily want to do any more. Do

:24:25.:24:31.

you worry about that? Absolutely. It is one of the five things that I

:24:31.:24:36.

worry about. There is a list to assess summit at the summit. One is

:24:36.:24:44.

Debt, solvency has a numerator and denominator. The denominator is how

:24:44.:24:48.

quickly you grow and generate income. There isn't enough to focus

:24:48.:24:51.

on that. Second, there is no vision for what the eurozone is going to

:24:51.:24:55.

look like in three years' time. Third, the banking system is still

:24:55.:25:01.

Abass. We still have capital inadequacy, asset problems. 4th, we

:25:01.:25:05.

haven't had a clear signal between liquidity problems and solvency

:25:05.:25:11.

problems, and as long as we don't delineate clearly, there will be

:25:11.:25:15.

question marks. And at the big bazooka, which is the ECB, it has

:25:15.:25:20.

and cumin. I sympathise with the ECB, because they have done a lot

:25:20.:25:24.

and have been a bridge to know where. They need to be a bridge

:25:24.:25:29.

there somewhere, but that place is not known. It is a long list and

:25:29.:25:39.
:25:39.:25:39.

growth is the first item...., briefly, surely De -- surely the

:25:39.:25:42.

ECB doesn't want to be a lender of last resort, but as the crisis

:25:42.:25:46.

continues, it is having to do a lot of emergency support for banks. Are

:25:46.:25:51.

you suffering from the fact that this crisis is not being resolved

:25:51.:25:55.

and there would be enough growth? Growth comes from assessing

:25:55.:26:00.

structural problems and of course, it is a concern. We see the growth

:26:00.:26:06.

prospects for next year are weaker and the aim of the fiscal measures

:26:06.:26:10.

is to limit the structural deficit, which of course takes into

:26:10.:26:18.

account... That hurts growth. Structural reforms had growth. It

:26:18.:26:21.

is reforming labour markets and things in the short term that

:26:21.:26:25.

actually might slow down economies. As we have seen from various

:26:26.:26:30.

countries, I think a number of measures have been taken in the

:26:30.:26:35.

last few years, and if you look at Spain for instance, Spain has tried

:26:35.:26:40.

to address its problems in the labour market. It is in a difficult

:26:40.:26:45.

situation but it is trying to reform the labour market in the

:26:45.:26:47.

direction where it will have more possibilities for employment. The

:26:47.:26:52.

truck -- the same is true for other countries as well. You should take

:26:52.:26:58.

into account the fiscal rule is addressing the structural deficit.

:26:58.:27:02.

The structural deficit takes into account the business... We have to

:27:02.:27:06.

leave it there. Thank you very much to all of you, of I'm Sorry, we

:27:07.:27:11.

have to cut it off. Fog in the Channel, Continent cut

:27:11.:27:15.

off. The old joke isn't as funny today, because it is clear where

:27:15.:27:19.

the rest of Europe wants to go. It is Britain's future that since

:27:19.:27:25.

clouded in doubt and that must include the future of the coalition

:27:25.:27:29.

between Euro-sceptic Conservatives and Europhile Liberal Democrats.

:27:29.:27:33.

Right now, Europe's top duo are apparently so fused in their common

:27:33.:27:39.

purpose they are known as the single name Merkozy. The joke doing

:27:39.:27:43.

the rounds at Westminster is that had David Cameron joined, it

:27:43.:27:47.

wouldn't quite have spelt kamikaze, but politically it could have

:27:47.:27:51.

amounted to quite the same thing. It would have been like the

:27:51.:27:54.

Maastricht Treaty row of seven years ago, except far worse,

:27:54.:27:59.

because he would have had to have brought a bill before parliament to

:27:59.:28:03.

bring the treaty into effect. There would have been MN bends, with Bill

:28:03.:28:08.

Cash and the critics who were around 20 years ago coming back for

:28:08.:28:12.

a second bite -- amendments. There would have been a call for a

:28:12.:28:16.

referendum, even a leadership challenge. The morning after in

:28:16.:28:21.

Brussels was very different. Soft music, warm handshakes, and David

:28:21.:28:25.

Cameron sticking his signature on the dotted line. It is just that

:28:25.:28:30.

this was the paperwork for Croatia to join the EU, not the treaty that

:28:30.:28:34.

most of Europe wanted. This does represent a change in our

:28:34.:28:38.

relationship with Europe, but the court relationship, the single

:28:38.:28:44.

market, trade, investment, that remains as it was and that is very

:28:44.:28:48.

important -- core relationship. In terms of the future and referendums,

:28:48.:28:52.

we will not be presenting a treaty to Parliament. Other countries are

:28:52.:28:56.

going to be signing up to a treaty that has some quite invasive

:28:57.:29:00.

aspects in terms of their sovereignty, their ability to set

:29:00.:29:03.

their own budgets. It will be a matter for them how they deal with

:29:03.:29:07.

their parliament. We will not take a treaty like that two hours.

:29:07.:29:12.

ins and outs of the politics are tricky for David Cameron and are

:29:12.:29:15.

pulling him in two different directions. Liberal Democrats think

:29:15.:29:19.

that Britain should do whatever it takes the stage in the European

:29:19.:29:23.

club, even if that means getting out of the coalition -- to stay.

:29:23.:29:27.

Meanwhile, plenty of Conservative backbenchers think we should use

:29:27.:29:30.

this as a once-in-a-lifetime opportunity to renegotiate better

:29:30.:29:37.

terms, if not entirely out of the EU, definitely closer out than

:29:37.:29:47.
:29:47.:29:48.

It is nearly 20 years since John Major's Government was brought to

:29:48.:29:52.

the very brink by splits over Europe. One of the leaders of that

:29:52.:29:56.

rebellion was clear - yesterday's veto should only be the start.

:29:56.:29:59.

There are many people who think perhaps we have been proved pretty

:29:59.:30:05.

well on the nail. What I'm saying is this - that there is a necessity

:30:05.:30:08.

to tackle the nature of the European Union as it now is, and I

:30:08.:30:13.

have said repeatedly in a debate yesterday for weeks, if not months

:30:13.:30:16.

and years, that we have to have a fundamental renegotiation of the

:30:17.:30:20.

treaties in our relationship to the European Union. Paul Goodman used

:30:20.:30:25.

to be Conservative MP and now writes for the Tory grassroots

:30:25.:30:28.

website Conservative Home, so he's pretty well tuned in to how

:30:28.:30:34.

Conservative MPs are thinking. There has been a tide of Euro-

:30:34.:30:36.

scepticism flowing through the Conservative Party for the past 25

:30:36.:30:40.

years since Thatcher's Brew speech. What this extraordinary veto has

:30:40.:30:45.

done this amazing event, is it's given that tide another big push,

:30:45.:30:48.

and after this, the question that a lot of Conservative backbenchers

:30:48.:30:53.

will be asking is, well, we've always been told we've got to be in

:30:53.:30:56.

the EU because of our national interests and because we have to be

:30:56.:31:00.

at the heart of Europe. If we're not, we're going to be at the edge,

:31:00.:31:03.

we have to renegotiate a completely new relationship because what's the

:31:03.:31:09.

point of being at the edge but governed by all the rules? While

:31:09.:31:12.

many Conservatives are clearly delighted, this is a very difficult

:31:12.:31:16.

time for Nick Clegg, leader of the Liberal Democrats, a former MEP and

:31:16.:31:20.

pro-European to his core, like much of his party. At the same time, of

:31:20.:31:25.

course, though, he's in coalition with David Cameron. Any Eurosceptic

:31:25.:31:28.

who might be rubbing their hands in glee about the outcome of the

:31:28.:31:32.

summit last night should be careful for what they wish for because,

:31:32.:31:36.

clearly, there is potentially an increased risk of a two-speed

:31:36.:31:40.

Europe in which Britain's position becomes more marginalised, and in

:31:40.:31:45.

the long run, that would be bad for growth and jobs in this country.

:31:45.:31:47.

But other Liberal Democrats are keener to pin the blame on the

:31:47.:31:51.

Prime Minister. I think David Cameron has let us down very, very

:31:51.:31:57.

badly. It's not simply a matter of the written Declarations which end

:31:57.:32:01.

up as treaties of one form or another. It's all about

:32:01.:32:05.

relationships, and what happened at the dinner last night in Brussels

:32:05.:32:10.

was that the 17 countries in the eurozone gathered amongst the 27 of

:32:10.:32:15.

the European Union and said we need help. We need to give the financial

:32:15.:32:18.

markets confidence about the euro that we're united in going forward.

:32:18.:32:21.

We need to make arrangements as quickly as possible, and we needed

:32:21.:32:25.

the help of everyone to do that, and David Cameron effectively said,

:32:25.:32:29.

I'm not prepared to help or to lift a finger. In fact, he went worse

:32:29.:32:33.

than that - he kicked them in the teeth that will not be forgotten.

:32:33.:32:37.

Could Europe then split the coalition? After so many supposedly

:32:37.:32:39.

impossible things have already happened, well, nothing appears

:32:39.:32:44.

completely out of the question. David Grossman. Where does this

:32:44.:32:51.

leave the coalition? With me is the Liberal Democrat Lord Oakshot and

:32:51.:32:56.

the Conservative MP Bernard Jenkin. For you and other Eurosceptics,

:32:56.:33:00.

this is brilliant news, what happened? Can I just make a

:33:00.:33:04.

criticism, which is there is an awful tendency in the BBC to turn

:33:04.:33:07.

this into a narrative about the coalition and about the

:33:07.:33:09.

Conservative Party. This is actually about the substance of an

:33:09.:33:14.

issue, and it's about the substance of an issue of which the

:33:14.:33:17.

Eurosceptic... And how much of this programme have we spent talking

:33:17.:33:20.

about the substance of the issue, and how much have we spent...

:33:20.:33:24.

we had your opening report saying alas for Britain we're isolated.

:33:24.:33:27.

This is interesting. You don't think this is significant for the

:33:27.:33:30.

relationship within the coalition? I do think this is very significant,

:33:30.:33:33.

and I think Matthew is going to think this is very significant. I

:33:33.:33:38.

think everybody should regard this as significant that we are now in a

:33:38.:33:41.

new situation, in a new relationship with our European

:33:41.:33:45.

partners because they are going off and doing something on their own,

:33:45.:33:49.

and we are not involved, but the foundations for that were laid at

:33:49.:33:53.

the Maastricht Treaty, and this moment was always going to become

:33:53.:33:57.

inevitable, and some of us have been saying that for a very long

:33:57.:34:00.

time, and we now must face the consequences of it, and I think

:34:00.:34:06.

David Cameron has now faced the consequences. He's confronted it at

:34:06.:34:10.

Brussels. He said that Eurosceptics shouldn't be celebrating. Can you

:34:10.:34:14.

think of one reason why they shouldn't? They shouldn't be

:34:14.:34:19.

celebrating. Just doing "I told you so?" Bernard Jenkin has been a

:34:19.:34:23.

serial rebel. He, with Iain Duncan Smith, has been leading the

:34:23.:34:27.

opposition effectively of our membership of the European Union.

:34:27.:34:31.

That's not true. He's now saying we told you so. The fact is this is a

:34:31.:34:35.

very damaging day for Europe and for Britain. He says the Europeans

:34:36.:34:40.

have gone off on their own. They haven't. Britain has cut itself off

:34:40.:34:48.

from our main trading partners, our main allies, our main friends. It's

:34:48.:34:52.

deeply dangerous. And millions of jobs, not just in the city, have

:34:52.:35:01.

been put in danger. You say we have given up... What are we giving up?

:35:01.:35:06.

A place at the table with 26 other countries. We have not given up. As

:35:06.:35:10.

David Cameron was explaining, we're still in the 27. The treaty

:35:10.:35:13.

structure is still answerable to the 27 structure as it was before.

:35:13.:35:16.

What has a changed? The only thing that's changed is that the other

:35:16.:35:20.

member states have decided to go off on their own and do something

:35:20.:35:24.

on their own because they cannot conceive of respecting a national

:35:24.:35:28.

interest - a relatively modest demand, I have to say. Many of us

:35:28.:35:33.

would have liked... Excuse me. Excuse me. Are you seriously

:35:33.:35:36.

suggesting that Angela Merkel for Germany and Nicolas Sarkozy for

:35:36.:35:40.

France are not defending their national interests? Of course they

:35:40.:35:43.

are. Don't be ridiculous. So they're saying - the fact is that

:35:43.:35:49.

we - this is the end game of a desperately silly decision by David

:35:49.:35:55.

Cameron when he was trying to buy right-wing votes in a leadership

:35:55.:35:59.

election to lead the mainstream European grouping - he would have

:35:59.:36:02.

been there in Marseilles with the Angela Merkel and Nicolas Sarkozy

:36:02.:36:11.

in Spain, and he's off with the head bangers and wackos in Eastern

:36:11.:36:19.

Europe... If - Prime Minister, would he have been at that dinner?

:36:19.:36:24.

He wouldn't. You're talking rubbish. No, I'm not. You may not have liked

:36:24.:36:27.

it, but Conservative Prime Ministers with a lot more

:36:27.:36:31.

experience, frankly, than David Cameron were there in awhriens the

:36:31.:36:36.

main players on the European right. Now they're completely isolated.

:36:36.:36:39.

Now what really matters is that the British Prime Minister has been

:36:39.:36:44.

doing special pleading for special interests in the City and

:36:44.:36:47.

conciliating people like you who have never accepted the coalition

:36:47.:36:54.

agreement. You're always asking for a referendum which isn't in the

:36:54.:36:56.

agreement instead of putting British interests first. You think

:36:56.:37:00.

this doesn't lead to a renegotiation between British...

:37:00.:37:04.

Put it this way... You seem to be torn about what's happened. Why not

:37:04.:37:10.

openly and honestly say so. I think there needs to be a renegotiation.

:37:11.:37:15.

If we don't get that, that'll be driving us towards the exit. That's

:37:15.:37:19.

why I want a renegotiation, because I want us to remain in the European

:37:19.:37:22.

Union. It's not in the coalition agreement. You're trying to wreck

:37:22.:37:29.

that agreement, which we all signed. The coalition agreement has been

:37:29.:37:36.

overtaken by recent events. It did not. The coalition agreement didn't

:37:36.:37:40.

envision the imminent collapse of the euro. It hasn't collapsed.

:37:40.:37:44.

Despite any lack of help from David Cameron, it hasn't collapsed.

:37:44.:37:48.

They're getting their act together, but without us. From now on are the

:37:48.:37:53.

parties going to get on as badly as you two are? No. We have a deal. We

:37:53.:37:58.

signed up to a deal on Europe which Mr Jenkin and his friends have

:37:58.:38:00.

never accepted. They basically don't trust David Cameron. They

:38:00.:38:04.

think he should have won. He didn't. The fact is a deal is a deal, and

:38:04.:38:07.

all the time you're trying to undermine it, and it's deeply

:38:07.:38:11.

damaging for Britain's position in Europe... I'm sorry. We have to

:38:12.:38:16.

Download Subtitles

SRT

ASS