UK banks 'not immune to regulation'

EU Economics Commissioner Olli RehnDavid Cameron's veto over European Union (EU) Treaty changes will not save the City of London's bankers and financial corporations from tougher regulation, the European Commission (EC) has warned.

EU Economics Commissioner Olli Rehn, welcoming the new "fiscal compact" agreed by the other 26 member states at last Friday's summit, said: "I regret very much that the United Kingdom was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives."
He went on: "We want a strong and constructive Britain in Europe and we want Britain to be at the centre of Europe, and not on the sidelines."

Mr Rehn was announcing the entry into force on Tuesday of a so-called "six-pack" of tougher economic monitoring and surveillance on all European economies, to which the UK had agreed and remained subject to, insisted Mr Rehn.

The "fiscal compact" agreed at Friday's summit by the other 26 added tougher measures and sanctions, and sanctions did not apply in the UK.

But Mr Rehn made clear that regardless of Mr Cameron blocking formal Treaty change at the summit, existing rules via the single market did apply.

Mr Rehn said: "If this move was intended to prevent bankers and financial corporations in the City (of London) from being regulated, that is not going to happen. We must all draw lessons from the financial crisis, and that goes for the financial sector as well.

"I would also like to remind you that the UK Government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance which enters into force on Tuesday. The UK's excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states."

Mr Rehn said the "intergovernmental" agreement at the summit to introduce a "fiscal compact" among 26 countries and bypass Mr Cameron's treaty change veto was "bold, effective and legally viable", before adding that the outcome was "a major milestone in Europe's economic governance".

He went on: "Of course, we would rather have had a treaty of 27 and not only 26. I regret that we could not, but we now have this fiscal compact of 26, which marks another step in the economic discipline of the European Union."

© 2011 Press Association
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