STRASBOURG: European Commission chief Jose Manuel Barroso said Tuesday that a demand by Britain for its financial services industry to be exempted from EU regulation threatened to break up the single market.
Barroso was speaking during a debate in the European Parliament on a European Union summit in which 26 of the 27 EU states agreed a new deal for fiscal and economic integration -- but which British Prime Minister David Cameron refused to accept.
"All in all the agreement in substance was quite impressive, but frankly we cannot say the same for form," Barroso told lawmakers.
Citing proposals jointly submitted with EU president Herman Van Rompuy and senior eurozone official Jean-Claude Juncker, Barroso said the aim of the summit was to find a way for all 27 EU states -- eurozone or not -- to change the bloc's treaty to fight the debt crisis together.
However, "the UK in exchange for giving its agreement asked for a specific protocol on financial services which as presented posed a risk to the integrity of the single market", he said.
A spokesman for the British leader later denied attempting to "undermine the single market".
The government did not want preferential status for Britain's financial sector and only sought equality, the spokesman told the BBC.
Barroso did not go into the detail of which exemptions Cameron specifically sought, although a future tax on financial transactions was one development Britain is known to strongly resist.
Barroso said he tried to broker a compromise with an amendment to the leaders' statement that would guarantee that "any measures adopted by the council (of EU leaders) and applied to the euro area only must not undermine the single market including financial services.
"Unfortunately this compromise proved impossible, so it was not possible to have a solution involving all 27," he said.
Cameron defended his decision in parliament in London on Monday to invoke a veto against a full 27-nation treaty, but French President Nicolas Sarkozy said the reality now was that Europe had become a two-speed union.
Britain is probing whether the eurozone is breaching treaty obligations by using EU-wide institutions and buildings, to which non-euro Britain is a major financial contributor.
As leaders across the European Parliament's different political groups hit out at "selfish" Cameron, Van Rompuy told the same debate he remained "fundamentally optimistic" about the prospects of the EU putting the crisis behind it.
He said 2011 might yet prove to be the EU's "annus mirabilis," or the miracle comeback after its nadir.
Van Rompuy also suggested Britain could yet return to the fold, adding: "At some point there will be 27 around the table and we will be able to hammer out something."
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