13 December 2012

UK European Scrutiny Committee report on Economic and Monetary Union

The Government's view

The Financial Secretary to the Treasury (Greg Clark) says that the Commission Communication... will not itself be the subject of discussion at the December European Council. He then comments that:

• the UK is not legally obliged to join the euro and the Government has been very clear that the UK will not join the euro under it;
• the Government has said that it recognises that the eurozone Member States are likely to want to move towards a stronger, more stable currency union and economic and financial stability in Europe is in the UK's interests;
• at the same time, the Government has been clear that the UK will not take part in measures designed to strengthen integration in the eurozone;
• it has also been clear that proposals must take account of the interests of all Member States, in particular with regard to the single market;
• the Government will always ensure that the UK's specific interests, especially on the single market, are protected;
• the document does not put forward actual legislative proposals — further Explanatory Memoranda would be due if specific legislative proposals were to be published by the Commission.

In a second Explanatory Memorandum, on the Van Rompuy Report,... the Minister, in addition to reiterating his comments on the Commission communication, says that:

• the Government welcomes the fact that the President says that "the views set out in this report focus on the euro area Member States as they face specific challenges by virtue of sharing a currency"; and
• it also welcomes the fact that the President says that the process proposed must be "fully compatible with the Single Market in all aspects".

Conclusion

Committee members note both the Government's reiteration of its general policy in relation to UK membership of the eurozone and to policies proposed in relation to the eurozone problems and the two specific comments on the Van Rompuy Report. However they are deeply concerned about the possible implications for the UK of what is proposed. In addition to the issue of a threat to the single market for financial services, already exemplified by the current Banking Union proposals, there is the question of democratic legitimacy and accountability. Committee members note that the Van Rompuy Report states that the organisation and modalities of this "are a responsibility of the European Parliament and national parliaments to determine jointly" but they are concerned:

• at the implications of the apparent presumption in the reports about the primacy of the European Parliament; and
• the implicit presumption that democratic legitimacy and accountability of a new strengthened EMU framework and cooperation under Article 13 of the SCG treaty should necessarily be considered within the context of the European Semester.

Committee members expect the Prime Minister to secure very robust language in the Conclusions of the forthcoming European Council about the single market and the role of national parliaments. They intend to recommend that these documents be debated on the Floor of the House in the light of those Conclusions. To that end they would like to receive from the Minister immediately after the Council a detailed account of how the Conclusions meet the concerns expressed in this Report about the single market and the role of national parliaments.

Full report

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