Friday

23rd Jun 2017

Merkel and Cameron seek common ground on Europe

  • 'Europe is being out-competed and out-invested,' Cameron says (Photo: World Economic Forum)

German Chancellor Angela Merkel and British PM David Cameron on Thursday (24 January) sought common ground on the future of the European Union, one day after he announced a referendum on Britain's EU membership four years from now.

Europe's competitiveness gap on the global market was a common concern of both Merkel and Cameron, in separate speeches held in the Swiss resort of Davos where leaders and businessmen meet yearly for the World Economic Forum.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"Europe is being out-competed and out-invested - and it's time we make it an engine for growth, not a source of cost for business and complaint for our citizens," Cameron said.

His plan to renegotiate Britain's membership terms in order to "repatriate" some powers from Brussels was not about "turning our backs on Europe - quite the opposite," he said.

"It's about how we make the case for a more competitive, open and flexible Europe –and secure the UK’s place within it," Cameron said.

As euro countries are "moving inexorably towards a banking union and forms of a fiscal union, that has huge implications for countries like the UK who are not in the euro and never will be," he added.

Consent in the UK for the changes that already have been taken is "wafer-thin," Cameron added, which is why a new deal with the EU and a referendum on it is needed.

Merkel, speaking a few hours later, struck a conciliatory tone.

"The euro was introduced with the expectation that one day all EU countries will adopt it. David Cameron repeated today that he cannot envisage Britain to become a member of the euro, we also have the Danish opt-out and in Sweden I believe there were two referendums against it," she said.

Merkel insisted that the formula of "enhanced cooperation" - meaning a group of EU countries pressing ahead with projects they can agree on, such as the fiscal compact signed among 25 members or the border-free Schengen zone where five EU members are not part of it - are the way forward.

"We are not a closed shop, we stay open to all who want to join. And we still hope that many countries will still want to join the euro," she said.

Similarly to Cameron, she stressed that boosting EU's competitiveness on the global market is essential for Europe to keep its prosperity in the future.

But the solution she proposes is quite the opposite of his view of a more "flexible", deregulated single market.

For Merkel, the way to boost competitiveness are binding contracts between each member state and the European Commission on issues such as reducing wage costs, making labour markets more flexible or investing in research and education.

"National parliaments will have to legitimise these contracts, which will be binding for each country signing them," she said.

'Smell the coffee'

One area they did agree on is the need for the EU to sign free trade agreements with the US, Japan and Canada and for industrialised countries to reach a deal on tax evasion and shadow banking.

Cameron went further.

He devoted a large section of his speech to saying G8 countries should fight not just tax evasion (which is illegal) but also tax avoidance, or, as he put it "setting up ever-more complex tax arrangements ... to squeeze their tax bill right down."

"They [tax-avoiders] need to wake up and smell the coffee because the public who buy from them have had enough," he said, alluding to Starbucks, a US-based coffee chain which last year caused a furore in the UK last year by paying almost no tax while earning billions.

"Some forms of avoidance have become so aggressive ... it's time to call for more responsibility and for governments to act accordingly," he noted.

London, the UK's Channel islands and its Caribbean protectorates are among the world's most deregulated financial centres.

But the British PM talked tough on the need for change.

"We're going to push for more transparency on who owns companies, on who's buying up land and for what purpose, on how governments spend their money, on how gas, oil and mining companies operate, on who is hiding stolen assets and how we recover and return them," he said.

UK's EU future dependent on other member states

EU leaders have reacted coolly to Prime Minister David Cameron's statement on Europe, in a reminder that much of what stands on the UK's wishlist is dependent on the goodwill of other member states.

Opinion

Cameron's gamble

David Cameron’s strategy relies on three rather shaky assumptions which is why the Prime Minister's bet on EU Treaty re-negotiation is likely to fail.

Poland: UK no longer a leading EU country

Britain has lost its place in the club of leading EU nations over its plan to hold a referendum on EU membership, the Polish foreign minister has said.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit