UK Vetoes New Eurozone Treaty

UK Prime Minister David Cameron vetoed the proposed treaty at the Eurozone summit on Friday, leaving the UK’s future role in Europe uncertain

London, UK (Pryce Warner International) December 12th, 2011 – After a series of late night negotiations, David Cameron opted to veto the proposed Eurozone treaty designed to save the common currency and restore investor confidence in the continent.

He stated that he did so to protect the City of London from increased regulations. This was deemed necessary as the UK financial sector accounts for up to a third of the countries income and any attempts to form an EU wide regulatory system would leave the UK with significantly less income.

Several commentators immediately pointed out that it makes no sense to attempt to appease financial institutions in this way, as they are largely responsible for the economic situation that made the EU summit necessary in the first place.

Mr Cameron’s Deputy Prime Minister, Nick Clegg, also immediately criticised the decision, stating that it would severely undermine Britain’s role in Europe and financial stability by allowing 26 of the other 27 nations to make decisions without the UK’s involvement. This criticism was also echoed by several other prominent Labour and Liberal Democrat MPs including Business Secretary Vince Cable.

Surprisingly, even the UK Independence Party, a staunchly anti-Europe political party, condemned the decision, saying that though the intention was to protect the City of London that actually no increased safeguards were achieved.

Initially several other EU countries declined to join the treaty but later reneged, leaving Britain the only country in the EU outside the decision making process. This has seemingly had the effect of increasing Britain’s sense of isolation within the EU.

While the controversy surrounding Mr Cameron’s decision to veto the proposal dominated the headlines, the question remains as to whether or not the increased safeguards that were agreed will do enough to save the Eurozone.

The principal agreements were that Eurozone countries will provide up to €200bn in extra resources to the International Monetary Fund to help countries in difficulty and that the Eurozone's two bailout funds, the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF), will be managed by the European Central Bank.

Whether or not this will be enough to help is not yet clear though the market response presently looks less than optimistic.

This has led some to advise those that live in the EU, and especially Expats, to consider more secure forms of investing money to protect themselves should the worst happen.

One tactic being adopted is for those that are remunerated in Euros to re-invest that money into other currencies, gold or silver as these will retain a much greater value in the event that the summit treaty does not do enough to help.

David Harra, Senior Market and Investment Analyst at Pryce Warner International Group, a financial services provider for Expats commentated: “Even though the UK will not be a part of the decision making process, they will remain inevitably tied to the fate of the Eurozone and the Euro, not least as they do not have a significant relationship in Washington to fall back on. There also remains the issue of whether or not the summit treaty will do enough. The big picture means that Expats do not have the luxury of moving assets between the UK or EU to protect themselves as the safety of both jurisdictions remains unclear. Anyone concerned about how this may affect them should immediately speak to their financial advisor to determine other jurisdictions or methods of investment that will offer greater levels of protection than banking institutions and currencies whose long-term stability remains in doubt.”

-------------------------------
By: Aneil Fatania
Financial Editor
Pryce Warner International Group
For any corrections of factual information contained within our news items please contact our editor.
Email: af@prycewarner.com
Skype: newsdesk-pwi
Telephone: U.K.- +44 20 3364 5016 or Monaco - +377 97 97 29 22