(Updates with spokesman’s comments in eighth paragraph, Rehn in 18th.)
Dec. 12 (Bloomberg) -- U.K. Prime Minister David Cameron will today defend his refusal to back a European Union accord aimed at saving the euro when he addresses lawmakers, seeking to temper both delight within his Conservative Party and the anger of his Liberal Democrat coalition partners.
Nick Clegg, the Liberal Democrat deputy prime minister, told BBC television yesterday he was “bitterly disappointed” by Cameron’s decision to veto a pact to tighten budget rules agreed to by the other 26 EU leaders at a summit in Brussels last week because he failed to gain assurances that would safeguard London’s finance industry. Cameron will make a statement in the House of Commons in London at 3:30 p.m.
Unlike Conservative lawmakers, a quarter of whom rebelled against Cameron and voted in October for a referendum on whether British should stay in the EU, the Liberal Democrats support wholehearted membership. Clegg said Cameron’s move left the U.K. “isolated and marginalized within the European Union.”
One senior Liberal Democrat, former Chief Secretary to the Treasury David Laws, blamed Cameron’s veto today in a Sky News television interview on a lack of British pre-summit preparatory work “to get some of the big nations on side and understand the concerns the U.K. had.”
Laws’s Lib Dem successor as chief secretary, Danny Alexander, insisted the two-party government is not in danger of breaking up. “This doesn’t threaten the coalition,” Alexander told BBC Radio 4. “The coalition was formed to deal with the enormous economic challenges facing the country.”
The coalition’s austerity drive has helped push the yield on Britain’s 10-year bonds close to those of German bunds as investors speculate the government will continue to slash the budget deficit. The challenge for Cameron is to keep the pro-EU Liberal Democrats and the anti-EU faction within the Conservatives -- whom Clegg called “spectacularly misguided” - - inside the same government.
“I’m bitterly disappointed by the outcome of last week’s summit, precisely because I think now there is a danger that the U.K. will be isolated and marginalized within the EU,” Clegg said. “I don’t think that’s good for jobs, in the City or elsewhere. I don’t think it’s good for growth or for families up and down the country.”
Cameron’s spokesman, Steve Field, told reporters today that officials from the prime minister’s office had called Clegg’s office to inform them of developments before negotiations were concluded at the summit. Field wouldn’t say whether Cameron spoke to Clegg before or after Conservative Chancellor of the Exchequer George Osborne.
By refusing to join the fiscal accord, Cameron strengthened the wing of his Conservative party that wants Britain to leave the EU. He also caused the biggest coalition divide since the parties campaigned on opposite sides in a May referendum on overhauling the voting system.
“The biggest shock for the Liberal Democrats is the realization that they are less important to the survival of the government than the Conservative backbenchers,” Andrew Russell, professor of politics at Manchester University, said in an interview. “The collapse of the coalition would not just be an economic disaster, it would be an electoral disaster” for Clegg’s party, he said.
A Populus Ltd. poll in today’s Times newspaper found 57 percent saying Cameron had done the right thing in exercising his veto, against 29 percent who disagreed. Asked whether it would diminish U.K. influence within the EU, 56 percent agreed, and 35 percent disagreed. Populus interviewed 1,951 adults online between Dec. 9 and 11.
A poll by ComRes Ltd., carried out just before the summit for the Independent on Sunday newspaper, showed 52 percent of Britons saying the euro crisis is an ideal opportunity for the U.K. to leave the EU. Recent opinion surveys have put support for the Liberal Democrats at around 11 percent, half the level of last year’s general election.
Clegg said that Cameron had been placed in a “difficult position” at last week’s summit because he faced “intransigence” from France and Germany. Nevertheless, he added that the government should now “fight, fight and fight again” for Britain’s interests within the EU.
After Britain refused to back a 27-nation agreement, the 17 euro countries opted to enshrine closer fiscal accord in a new deal that leaves out the U.K., instead of amending EU agreements that date back to the 1950s.
‘Their Own Thing’
Cameron told reporters following the all-night talks that “what was on offer just wasn’t good enough for Britain. It’s better to allow those countries to do their own thing on their own.”
Britain’s objections won’t shield London’s banks from European regulations, EU Economic and Monetary Commissioner Olli Rehn said today.
“If this move was intended to prevent bankers and financial corporations of the City from being regulated, that is not going to happen,” Rehn told reporters in Brussels. “We must all draw the lessons from the ongoing crisis.”
The EU is the U.K.’s largest market and took 54 percent of its exports last year. The Organization for Economic Cooperation and Development said on Nov. 28 that Britain’s economy may already be shrinking in the current quarter and will contract in the first three months of 2012, pushing it into a recession.
David Miliband, a former foreign secretary from the opposition Labour Party, said Cameron hadn’t achieved anything.
“This is the first veto in history not to stop something,” he told BBC Radio 4. “The plans are going right ahead. It was a phantom veto against a phantom threat. David Cameron didn’t actually stop anything because the other 26 are going on and, of course, the provisions of the treaty would not have weakened our rights and freedoms one iota.”
--With assistance from Gonzalo Vina in London and James G. Neuger in Brussels. Editors: Eddie Buckle, Andrew Atkinson.
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