On balance, the UK government would support this idea but is less than enthusiastic about some of the other banking union proposals on the table and Chancellor George Osborne has today spoken out against power being removed from the City of London. He stressed that safeguards would have to be in place to protect the UK’s financial sector if such moves towards a banking union were implemented.
One proposal could see Brussels being able to parachute n a “special manager” to run an ailing bank; another is the idea of "intra-group support agreements", under which banks with operations in several countries across the eurozone would be allowed to transfer resources from one part of the group to another in times of crisis.
Speaking this morning on Radio 4’s Today programme, Mr Osborne said: "There is no way that Britain is going to be part of any eurozone banking union. I think Britain will require certain safeguards if there is a full blown banking union."
He also urged the eurozone to use its bailout fund to recapitalise Spain's banks but said that he did not know how swiftly eurozone leaders would reach an agreement on the issue, as he was "not directly party to these discussions".
However, he said: "I am optimistic they are working hard on solution and I think a solution is coming.”
The Chancellor also stressed the UK government's commitment to a referendum on Europe in the event of a "significant transfer of power and sovereignty" to the EU but said he did not believe that would necessarily happen as a result of the current negotiations.
For more information, speak to London Accountants Harris Lipman
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