UK Moves Could Cripple Progress To Save The Euro

euro burning

Photo: Markusram on flickr

UK Prime Minister David Cameron has come out publicly against German Chancellor Angela Merkel’s moves to expand the European Union’s power and federalize control of member states balance sheets, according to The Guardian.The move puts political progress to protect the euro in serious doubt, because it could initiate a new two track European Union.

Right now, the EU works because the euro is seen as something all members either consider or plan to enter. They maintain, or plan to maintain, their national budgets within the rules of the Maastricht Treaty. Obviously, member states have not followed those rules, and Greece, Portugal, Ireland, and Spain are perfect examples of that. The UK and Denmark have special exemption from following these rules.

Merkel wants to give the European Union real power over its member states’ budgets, forcing them to take action to limit their deficits and debt.

But the UK, a key member of the European Union (but not the eurozone) has said an emphatic no to an expansion of power for the EU.

This means that Merkel, and whomever she can rally in support, will have to exclude the UK from whatever reforms are made.

If the UK can negotiate its way out of this political expansion, how many other states will? And how long will it take for legislators in Brussels to find a way to write their way out of this mess?

There is no easy way for Germany to get their way on EU budgetary controls. Will that leave them looking for other paths out of their problems?

Now Check Out The Ultimate Guide To Sovereign Debt Crises >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

euro moneygame-us uk