Ed’s interview in the Financial Times on the EU summit

You can read Ed’s interview in today’s FT here or below:

Balls attacks ‘catastrophic’ EU leadership

By George Parker

Ed Balls has attacked a “catastrophic failure of leadership” by David Cameron and other European leaders at last week’s EU summit, warning that a debate about Britain’s isolation should not obscure the ongoing danger to the euro.

The shadow chancellor said David Cameron should have played a lead role in trying to resolve the eurozone crisis – including ensuring the European Central Bank acted as a lender of last resort – instead of “walking away” from the talks.

“We were told in the days and weeks ahead of the summit that it was the vital meeting, but then nothing happens,” he said in an interview with the Financial Times. “There was an abdication of responsibility by all, not just by some.”

Mr Balls said the summit had not addressed the crucial role of the ECB to head off the eurozone sovereign debt crisis. He also believes that European leaders – not just David Cameron – must move away from collective austerity and focus on growth.

By focusing on the wider eurozone problem, Mr Balls may be partly acknowledging that Mr Cameron’s decision to block a new EU treaty will play well with British voters, not to mention the media.

But he said the veto was a “short term and expedient” measure. He admitted that the prime minister was right to hang tough, but argued: “Walking away plays into a short-term political game. You should hang in there and argue for a better outcome.”

In the medium-term, Mr Balls believes the British veto has left UK business and the City more vulnerable and that future battles on single market laws – including financial services regulations – could be harder to win.

“The fear is that we will see a draining away of influence on financial services matters,” he said. “David Cameron will have spent the weekend drinking champagne but the hangover could last for many months to come.”

The shadow chancellor believes British prime ministers are often unable to distinguish between triumphs and defeats at European summits, citing Margaret Thatcher’s “handbagging” triumph at Fontainebleau in 1984 when she secured the British rebate.

“She was worried that the deal wasn’t good enough,” Mr Balls said. “Later it went down as a great victory.” He believes that any triumphalism displayed by Mr Cameron in the Commons today will be shortlived.

In particular, the former Labour City minister is dismissive of Mr Cameron’s attempts to roll back the application of qualified majority voting – replacing it with a requirement for unanimity – in certain areas of financial regulation.

The prime minister argued that unanimity should apply in areas such as the extension of powers to European financial regulators or in the application of bank “user charges”: Mr Cameron feared that a financial transactions tax might be applied as a regulatory fee on banks, thus making it subject to majority voting.

Mr Balls said that the operation of QMV in the single market and in financial services was one of Lady Thatcher’s proudest achievements – at the time at least. “It is massively in Britain’s interests because it stops countries blocking a way forward in financial services,” he said. “But of course that only works if you have allies at the table.”

The shadow chancellor is often a highly partisan figure, but he concedes that all British prime ministers are put in an almost impossible position when they travel to Brussels summits because of hostile media and public opinion.

“Our debate is always binary,” he said, echoing the observation of Tony Blair that British leaders were faced with a stark choice of “isolation or treason”.

“If you reach an agreement you are accused of selling out the national interest,” he said. “Leaders have got to get on top of that.”

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Posted December 12th, 2011 by Ed's team