David Cameron is being urged by Conservative MPs to consider a range of measures to prevent Britain's financial services sector being hobbled by EU legislation, including possibly seeking an outright exemption from Brussels rules.
The Fresh Start group of Tory MPs is drawing up proposals for recasting Britain's relationship with Europe and will this week produce new ideas focused on ensuring the City maintains its global competitive edge.
Their paper proposes that Britain could deploy the "Luxembourg compromise", by which countries with an overriding national interest in an area of EU law can appeal to have the issue settled in their interest.
The paper says that, more drastically, the UK government could seek a unilateral break on or exemption from EU financial services regulation, although it is extremely unlikely that other Member States would ever agree.
It suggests a double lock: "Lock One would assert the special circumstances that are the UK's stake in financial services, requiring the [European] Commission to reconsider proposals that impact disproportionately on the UK.
"Lock Two would give the UK a right of appeal for any proposal at any stage during the decision-making process before the proposal had been agreed by the Council and European parliament."
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