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Cameron: Britain no closer to joining European fiscal treaty

From Richard Quest, CNN
updated 10:47 PM EST, Thu January 26, 2012
STORY HIGHLIGHTS
  • David Cameron says Britain is at the heart of economic discussions in Europe
  • But he does not see changes that would allow Britain to back European treaty changes, he says
  • Britain was the only European nation to refuse point-blank to sign up to the new treaty
  • "To ease the current crisis you have got to resolve the Greek situation," he says

Davos, Switzerland (CNN) -- Prime Minister David Cameron acknowledged Thursday there had been no movement on renegotiating Britain's inclusion in a treaty thrashed out by European leaders last month in a bid to stave off a debt crisis.

Britain was alone among the 27 European Union nations in refusing point-blank to sign the European deal, intended to ensure the closer integration of the national budgets of the 17 eurozone countries that use the euro as a currency.

The so-called "fiscal compact" would usher in a new legal framework and greater fiscal scrutiny, as well as measures to strengthen mechanisms that guarantee short-term stability for euro economies in trouble.

Britain's refusal to sign the treaty means the countries that back the compact must go ahead with the deal outside the European Union.

Speaking at the World Economic Forum in Davos, Switzerland, Cameron told CNN that he could not see that scenario changing.

"I haven't seen that movement because the conditions we set out are the conditions we set out -- and they haven't been moved towards," he said.

Cameron's comments come ahead of a European summit meeting in Brussels on Monday.

Cameron: 'Challenging economic times'

Some had thought that a deal would be reached between Britain's European partners that would allow Cameron to reverse his potential veto. But, Cameron said, "I don't see that development."

And he said Britain would not be disadvantaged by putting itself outside the discussions on the treaty.

"The reason we didn't join the treaty is the same reason we are not joining it today," he said.

"We asked for safeguards, we asked for conditions particularly around the single market and financial services... we haven't got those safeguards, so they can't have a treaty inside the European Union."

But Britain would still be at the heart of the debate on "what really matters" in Brussels, he said -- the single market, competitiveness and helping Europe's economies grow.

In December, Cameron said he had effectively vetoed an original deal, forcing German Chancellor Angela Merkel and French President Nicolas Sarkozy to forge ahead with a treaty that will be subservient to EU regulations.

The new treaty is due to be finalized until March 2012, after which it will have to be ratified by all participating countries. Hungary, Sweden and the Czech Republic also expressed reservations about treaty change -- but left the door open, pending parliamentary debate.

To ease the current crisis you have got to resolve the Greek situation, you've got to strengthen the banks, and the firewall's got to be big enough to deal with any contagion in the system
David Cameron, British PM

Cameron said it was in Britain's interest as well as that of its European neighbors that the current debt crisis was resolved, but acknowledged that it wouldn't be easy.

If the single currency is to work, the prime minister said, some short-term measures have to be taken and longer-term issues grappled with.

"Short term, to ease the current crisis you have got to resolve the Greek situation, you've got to strengthen the banks, and the firewall's got to be big enough to deal with any contagion in the system," he said.

And in an apparent sign of frustration at the lack of progress, he added: "You could almost set it to music because politicians have been saying it for so long -- but we've got to deliver it in the beginning of this year, and that's only the start."

Cameron also rejected suggestions he should ease the austerity measures his government has imposed in Britain, even as the eurozone heads into recession.

Britain has to show the world it is paying down its debt in order to ensure its recovery and keep interest rates as low as they are, he said.

"If you took your foot off the pedal and you eased up and spent some more money... you could lose all the benefit of that, by those interest rates going up."

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