French President Nicolas Sarkozy told David Cameron he was “sick” of his advice over the eurozone crisis last night as the EU summit ended in acrimony and indecision.
The pair clashed because Britain was pushing for a full meeting of all 27 EU leaders next week, rather than allowing the 17 countries in the euro to stitch up a deal on their own.
“We’re sick of you criticising us and telling us what to do,” the French leader is said to have told the Prime Minister in Brussels. “You say you hate the euro, you didn’t want to join and now you want to interfere in our meetings.”
Mr Cameron’s gift of a pink woollen blanket for Mr Sarkozy’s new baby daughter Giulia apparently did little to lighten the mood.
The president went on to say he was “sick” of picking up newspapers and reading advice on the eurozone crisis from the Prime Minister and Chancellor George Osborne.
Tempers frayed as leaders took tentative steps towards a deal to strengthen the banking system, boost bailout funds for debt-stricken economies and write off a huge chunk of Greece’s towering debts.
Europe’s 13th crisis management summit in less than two years ended with leaders having to agree to meet again on Wednesday to seek a comprehensive solution to the debt contagion threatening the future of the single currency.
Fears are growing that the package of measures will not be enough to withstand potential future economic shocks - amid warnings that Greece could swallow all the remaining eurozone bailout cash on its own.
There is mounting alarm about the state of the Italian economy and its failure to take steps to get on top of its debts, which stand at 120 per cent of national income.
Ultimately, the Prime Minister had his way and another full meeting of all 27 EU leaders was agreed - though this will mean him having to tear up his travel plans for the week.
Proposed trips to Japan and New Zealand will be cancelled, while the Prime Minister is likely to arrive late for a Commonwealth summit in Australia with the Queen.
Mr Cameron won agreement from other leaders for unspecified “safeguards” for Britain and other non-euro countries against potentially damaging rulings from a new, more closely integrated eurozone.
After hours of talks, the leaders agreed that European banks will need £94 billion of fresh capital over the next six to nine months to shield themselves against potential debt defaults by EU countries. But the figure falls short of some market estimates of the necessary recapitalisation. A recent International Monetary Fund report identified a £175 billion black hole in banks’ balance sheets stemming from sovereign debt writedowns, while other experts put the figure higher still.
Mr Cameron urged eurozone leaders to deliver a credible response to restore market confidence in the single currency.
After the six-hour summit in Brussels, he warned that the crisis was having a “chilling effect” on all 27 EU economies, adding: “While the UK is not in the eurozone and has no intention of joining, it is in Britain’s interest to have a strong and healthy euro. Do people have the confidence that the eurozone is putting in place what’s needed to contain any contagion? We need further progress to that decisive solution.”
Mr Cameron repeated his pledge never to join the euro, describing it as “like the ERM [the disastrous Exchange Rate Mechanism] without an exit”. Greece and Portugal are already on life support, having had to be bailed out by eurozone countries and the International Monetary Fund.
Those two countries - and probably Italy and Spain - are expected to need more help to meet the new requirements for banks to protect themselves by holding more capital. Of £383 billion in the Eurozone’s bailout fund, £116 billion has already been spent propping up Greece, Portugal and Ireland’s struggling economies.
But more of the fund is likely to have go to Greece to stop it defaulting on its borrowing - and Italy alone is likely to need another £218billion next year just to service its existing debts.
Other countries will not be able to meet the bill for propping up banks deemed to be dangerously exposed to sovereign debt themselves.
German Chancellor Angela Merkel warned that if Italy’s debt remains at 120 percent of gross domestic product “then it won’t matter how high the protective wall is because it won’t help win back the markets’ confidence”. - Daily Mail