With the UK not part of the Eurozone, it was not surprising that Prime Minister David Cameron raised the ire of President Sarkozy of France in pressing for inclusion in the talks leading up to the recent Eurozone debt rescue deal. Arriving earlier the Prime Minister said that he was glad to be at the talks, as many issues the leaders would discuss were directly relevant to Britain. Mr. Cameron then joined leaders of all 27 EU nations for the summit, which was followed by a working dinner attended only by heads of the 17 nations using the Euro.
UK Chancellor George Osborne commented afterwards that the debt deal agreed by the Eurozone leaders was much better than expected but additional bailout funds should not be expected from Britain. He also confirmed that no British banks would be required to hold additional capital following the meeting which, in addition, and to avoid a Greek default on its debt, essentially forced a 50% discount on Greek debt in those European banks involved.
The question is how should we view this performance by Mr. Cameron? Was he right to insist on the UK being involved in the Eurozone talks despite upsetting his French counterpart? We must consider that on balance he was right, faced with no choice but to get involved, based on past experience when France and Germany have got together to carve out a solution impacting the EU. The most recent and celebrated case is when they came up with the idea of a Tobin-type tax on financial transactions within the EU, 90% of the net burden of which would have been borne by the UK, given the dominant position of the City of London in European financial markets! This Tobin tax proposal is also a prime example of the EU not considering its overall competitivity as a trading bloc, with both George Osborne the Chancellor and his Labour opposition counterpart Ed. Balls in agreement that such a tax should only be applied on a global basis.