European Council

George Kerevan Excerpts

Monday 22nd February 2016 Commons Chamber

[The Prime Minister]

That is a very good question. It would depend on what was in that treaty. If the eurozone members were to bring forward treaty changes to change the nature of the eurozone, but without in any way affecting competencies here in Britain, I suspect we would be able to get our changes on ever closer union and on the governance surrounding the eurozone into that treaty. Whether or not such a treaty change requires a referendum simply depends on whether it passes competencies from Britain to Brussels. If the answer is yes, we have to have a referendum; if the answer is no, we do not.

[George Kerevan (East Lothian) (SNP)]

In his statement the Prime Minister said, “Responsibility for supervising the financial stability of the UK will always remain in the hands of the Bank of England”, but we already share that responsibility with the European Banking Authority and we are already signed up to the single rulebook of that authority. How is the Prime Minister’s statement compatible with the view of Mr Andrea Enria, the head of the European Banking Authority, who says that that institution must be the dominant player in setting rules, particularly if Britain wishes to keep the pound and stay within a single European financial regulation?

[The Prime Minister]

The answer to that question required something like 35 hours of negotiation because it is so important. Let me try to précis it. Of course there are the banking union arrangements, and the eurozone countries need to have their banks properly scrutinised and regulated at a European level. We have our own currency and our own banking supervision arrangements. In trying to supervise a complex, large economy such as Britain, which has one of the largest financial centres anywhere in the world, not just banks but other financial institutions such as central counterparties are systemically important. That is so important because ultimately we need to make sure that whatever the eurozone does, we are protected by the Bank of England playing the role and being able to intervene to resolve and to supervise those systemically important institutions. That is what paragraph 4 is about.

Although that sounds very technical, at its heart is actually something fantastically important: if Britain—fifth largest economy in the world, important financial centre—cannot have fair rules in an organisation where the euro is obviously a very large currency, there really would be a case for saying, “Hold on a second. This is a single currency-only organisation. We’d better leave.” So it was absolutely crucial to get it settled—technical but, in the end, fundamentally important—whether we can get fair treatment inside this organisation, and the answer is yes we can.