Analysis: Cameron puts Britain offside and offshore in Europe

Mon Dec 12, 2011 12:04pm EST
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By Paul Taylor

LONDON (Reuters) - .David Cameron has put Britain offside and offshore in Europe.

In his failed last-minute quest for special treatment over financial regulation, the prime minister has taken Britain out of the room where decisions on the future of Europe will be shaped.

The consequence could well be a prolonged, bitter parting of the ways between the British and the rest of the European Union, culminating in an acrimonious divorce in which both sides lose.

The cheers of British Euroskeptics for Cameron's veto of EU treaty changes to allow the countries that share the euro single currency to pursue closer fiscal union were echoed by cries of "good riddance" in much of mainland Europe.

How this can safeguard the interests of the City of London financial centre is a mystery, not least to some of the bankers and executives whose much criticized sector accounts for 10 percent of the British economy.

"No matter what happens now, the UK has isolated itself and lost critical influence for no gain whatsoever," said Sony Kapoor, head of the Brussels economic think-tank Re-Define.

Britain is already seen by many as a free-rider, enjoying the benefits of being the euro zone's principal financial centre without the responsibilities of membership, while refusing to contribute to rescue packages for indebted countries.

The UK does pay a small share of loans to Greece and Portugal via the International Monetary Fund, and it lent money bilaterally to Ireland, a neighbor and big trade partner, but it is refused to pay into the euro zone's bailout fund.   Continued...

<p>Britain's Prime Minister David Cameron walks out of 10 Downing Street as he prepares to greet Bahrain's King Hamad bin Isa Al Khalifa, in central London December 12, 2011. REUTERS/Olivia Harris</p>